Monday 22nd September 2008
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Under the plan hatched by Treasury Secretary Henry Paulson and Federal Reserve chairman Ben Bernanke, the Treasury will acquire illiquid mortgage debts in a package Bloomberg News reported as being worth US$800 billion.
The Standard & Poor’s 500 Index surged 4% to 1255.08 on Friday, bringing its two-day advance to 8.3%. The Dow Jones Industrial Average rose 3.4% to 11388.44.
The US rescue plan helped lift stocks worldwide. The FTSEurofirst 300 index jumped 8.2% to 1150.78 points in a record one-day gain. Japan’s Nikkei 225 rose 3.8% to 11920.86 on Friday.
In other moves to contain the financial crisis, the US Securities and Exchange Commission and the UK’s Financial Services Authority imposed temporary bans on short-selling financial stocks.
The S&P 500 Financials Index surged more than 20% on Friday, with Washington Mutual soaring 42% and Citigroup gaining 24%.
Bond fell as stocks rallied. US Treasuries tumbled for a second day as some investors reversed safe-haven buying.
The yield on two-year Treasury notes jumped to 2.21% from 1.73%. Ten-year Treasuries rose 28 basis points to 3.83%.
The US dollar had its biggest gain against the yen in five months, rising to 107.42 yen in New York, from 105.44. The dollar fell to $1.4464 per euro from $1.4348.
Crude oil for October delivery rose $6.67 to $104.55 a barrel on the New York Mercantile Exchange.
Gold futures had the biggest decline in 28 years, falling as much as 7.6% on the New York Mercantile Exchange and trading at $843.20 an ounce.
Lehman Brothers, which has filed for bankruptcy, won federal court approval to sell its US business to Barclays Plc for $1.75 billion.
Meantime, Bloomberg reported that General Motors will use the remaining US$3.5 billion of a US$4.5 billion revolving credit line as the financial crisis hampers the ability of companies to borrow more.
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