Global stock markets rally continues
- 28 May 2013
- From the section Business
Global markets rallied on Tuesday, bolstered by reports that central bank stimulus measures may continue and the release of strong US economic data.
Wall Street closed 0.7% higher, helped by data showing the biggest rise in US house prices in seven years.
Central banks in Europe and Japan have pledged to maintain monetary policy support to bolster economic recovery.
Markets were hit last week when the US Federal Reserve suggested it might start slowing its stimulus programme.
The Dow Jones index closed 0.7% higher, while the broader S&P 500 closed 0.6% up. In Europe, the FTSE 100 closed 1.6% higher, while France's Cac and Germany's Dax indexes added 1.4% and 1.2% respectively.
On Monday, when Wall Street and London markets were closed for holidays, European Central Bank board member Joerg Asmussen said monetary stimulus would stay as long as necessary.
Meanwhile, on Tuesday, Bank of Japan board member Ryuzo Miyao said it was vital to keep interest rates stable.
"Investors want to make sure that everyone is in the same boat, since monetary policy has been the mother's milk of the rally so far this year and there was some concern that policy would be changed or amended," said Paul Nolte, managing director at Dearborn Partners.
Investor sentiment was also boosted by US house price data that suggested recovery in the property market was gathering pace. The Case-Shiller index said the annual rise in prices was the strongest for seven years.
Separately, data from the Conference Board showed US consumer confidence in May rose to its highest level in more than five years.
Ryan Detrick, senior strategist at Schaeffer's Investment Research, said: "They say the stock market tends to lead the economy. Now we're starting to see the improvement on the economic front, so there's some justification for this rally."
On Tuesday, the Japan's Nikkei 225 index rose 1.2%, while the yen slipped against the dollar, a move that should help Japanese exporters. Other Asian indexes also ended higher, and eyes will be on the start of the next trading day to see if the rally is maintained.
Monetary stimulus has contributed to stock market gains this year, with the S&P 500 up about 17% and the FTSE 100 at a 12-year high.
But the run came to an abrupt halt last week after Fed chairman Ben Bernanke said US central bank may pull back on its bond purchases in the coming few weeks.