Global markets rose Wednesday on hopes that financial authorities in the U.S. and Europe may take action to stimulate economic growth and ease the financial turmoil that is threatening to tear apart the 17-country eurozone.
LONDON — Signs of a deal to avert an economically damaging U.S. debt default boosted world equity markets and the dollar on Tuesday, though firm short-term interest rates highlighted concerns that the problem may just be postponed.
Hopes rose after U.S. Senate Majority Leader Harry Reid, a Democrat, and his Republican counterpart, Mitch McConnell, ended a day of talks on Monday, with Reid saying they had made “tremendous progress”.
Andrew Wilkinson submits: Risk aversion continues to underpin the foundations of a powerful advance sending the dollar index to a 10-week peak as investors unwind positions vulnerable to an avalanche of fear. For investors confident in the global recovery theme, there remain two stumbling blocks. Eurozone sovereign debt fears have been reawakened in the aftermath of an €85 billion bailout for Ireland.
A pledge by Spain to cut its budget deficit and positive European economic data eased concerns that the eurozone crisis could hit the global recovery, lifting Asian markets and the euro Thursday.Sentiment was also bolstered after US shares rallied on data showing exports and imports soared, pointing to continuing improvement in global trade, while a flurry of strong corporate earnings results lifted Japanese shares.