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Stocks grow cautious after rally | Stocks grow cautious after rally |
(about 4 hours later) | |
US stocks lost ground on Wednesday as Federal Reserve Chairman Ben Bernanke said it was possible the US economy could enter recession. | |
Testifying before a congressional committee, Bernanke said the US economy would not grow much in the first half of 2008 and could actually contract. | |
The Dow Jones average fell 0.31%, or 38.84 points, to 12,615.52. | |
European stocks clung on to gains, inspired by investor hopes that the worst of the credit crisis may be over. | |
Strong demand for a Lehman Brothers share offering, despite fears it could face similar problems to troubled rival Bear Stearns, has boosted confidence. | |
In Europe, the Paris Cac was up 0.82% and the Frankfurt Dax gained 0.9%. London's FTSE 100 rose 0.69%. | |
"There is growing talk that the worst might be over, both for equities and the dollar," said Julian Jessop Chief International Economist. | |
"But while prompt action by the Fed and [some] other central banks may have averted the imminent threat of a financial meltdown, substantial risks still hang over the US and other major economies." | |
Asian stocks had rallied earlier in the day. | |
Hong Kong's Hang Seng index closed up 3.2% and Japan's Nikkei 225 index hit a one-month high after strong overnight gains on Wall Street. | Hong Kong's Hang Seng index closed up 3.2% and Japan's Nikkei 225 index hit a one-month high after strong overnight gains on Wall Street. |
'Concerns easing gradually' | 'Concerns easing gradually' |
Earlier this week, US investment bank Lehman Brothers and Switzerland's UBS both announced new share issues to repair their balance sheets, with both actions being well received by markets. | |
UBS also announced a loss of $39bn on sub-prime writedowns, and its chief executive resigned. | UBS also announced a loss of $39bn on sub-prime writedowns, and its chief executive resigned. |
"Worries about the global credit market and the health of the US economy had been stifling investors," said Kim Sung-Bong, an analyst at Samsung Securities in Seoul. | "Worries about the global credit market and the health of the US economy had been stifling investors," said Kim Sung-Bong, an analyst at Samsung Securities in Seoul. |
"Now that those concerns are easing gradually, the market is staging a relief rally, which is quite natural." | "Now that those concerns are easing gradually, the market is staging a relief rally, which is quite natural." |
Broad rally | Broad rally |
The rally which began on Wall Street continued in Asia overnight. | The rally which began on Wall Street continued in Asia overnight. |
On Tuesday, the Dow Jones in New York closed up 3.2% or 391.5 points at 12,654.4. | On Tuesday, the Dow Jones in New York closed up 3.2% or 391.5 points at 12,654.4. |
In Tokyo, the Nikkei 225 index ended up 4.2% at 13,189.36. Hong Kong's Hang Seng Index climbed 3.2% to 23,872.43. | In Tokyo, the Nikkei 225 index ended up 4.2% at 13,189.36. Hong Kong's Hang Seng Index climbed 3.2% to 23,872.43. |
The Shanghai Composite Index climbed more than 3% and stock indexes in Australia, the Philippines, Singapore, South Korea and Taiwan all gained more than 2%. | The Shanghai Composite Index climbed more than 3% and stock indexes in Australia, the Philippines, Singapore, South Korea and Taiwan all gained more than 2%. |