Global stocks skyrocketed on Friday in the first trading day of 2009 amid investor hopes for a brighter year ahead after a horrendous 2008 that hacked down stock markets around the world. On Wall Street, stocks staged a powerful rally as investors bet on US president-elect Barack Obama's massive plans to revive the world's biggest economy, stuck in recession for the past year.
The Dow Jones Industrial Average surged 258.30 points (2.94 percent) to finish at 9,034.69. The tech-studded Nasdaq leapt 55.18 points (3.50 percent) to 1,632.21 and the broad-market Standard & Poor's 500 index advanced 28.55 points (3.16 percent) to 931.80. "The market awaits details of a fiscal stimulus plan to be offered by the Obama administration," said Al Goldman, analyst at Wachovia Securities.
Obama, who takes office on January 20, has already pledged stepped-up efforts to revive the moribund economy in the face of the worst global financial crisis since the Great Depression. Before the New Year holiday Thursday, Wall Street had closed 2008 with a two-day rally that failed to ease the blow of horrific full-year losses.
The blue chip Dow gained 1.25 percent Wednesday but ended the year with a loss of 33.84 percent, the worst since 1931. The S&P 500 also had its most dismal annual performance in 77 years and the Nasdaq posted a record loss. "Hope for much better returns in 2009 has permeated the marketplace," said Patrick O'Hare, an analyst at Briefing.com.
"Unless there is a sea-change in sentiment over the course of the next two trading sessions, it looks as if we'll be able to say there was indeed a Santa Claus rally." In Europe, the Paris CAC 40 index shot up 4.09 percent, the Frankfurt Dax soared 3.39 percent and the FTSE 100 in London rose 2.88 percent. The three key markets had shed between 31 percent and 43 percent in 2008.
"The mindset may be that the turmoil of 2008 is now behind us and that 2009, although not set to be great, needs to start with a bang," said CMC Markets trader Jimmy Yates. Elsewhere in Europe, Belgian stocks were up 3.78 percent, Spain rose 3.16 percent, Italy was up 2.79 percent, while Amsterdam rocketed up 5.00 percent. Friday's rally was an extension of the uptick in global stock markets ahead of the New Year's holiday earlier this week.
Dendra Lambert, analyst at Hilliard Lyons, said a two-day rally to close out the year was a positive sign. "After experiencing the worst losses since the Great Depression, some onlookers believe bargain hunters were starting to emerge in the final days of trading of 2008," she said. Reykjavik suffered the biggest loss of any stock market in 2008, with the Icelandic bourse diving 94 percent in value. It was followed by Moscow, which plunged 72.5 percent and Dubai which shed 72 percent.
However, many investors and experts expect 2009 will be an even worse than last year. "As we enter 2009, the US and global economies are in steep decline, in what is the most severe synchronised global downturn of recent times," said Nigel Gault, chief US economist at IHS Global Insight. "We are not looking for signs of recovery yet, merely for signs that the rate of decline is becoming less severe - but cannot find them."
Others were decidedly more upbeat. David Kotok of Cumberland Advisors said the outlook is positive. "We expect the central banks and governments of the world to continue aggressive monetary and fiscal stimulus. We anticipate credit markets will improve in 2009," he said. The new year cheer was contagious. In Latin America, Brazil's Bovespa shot up 7.17 percent, Mexico's main index gained 3.89 percent and Argentina jumped 5.89 percent.
Earlier Friday in Asia, Hong Kong soared 4.6 percent and Seoul added 2.93 percent. The Tokyo market remained closed until Monday for extended new year holidays. Last Monday the bourse ended the year down 42.12 percent from 2007, its worst-ever annual percentage fall.
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