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The New Zealand sharemarket has leapt ahead today following the announcement that US authorities were proposing a US$700 billion ($1.03 trillion) bailout of finance markets.
Just before 3pm, the benchmark NZSX-50 index was up 72points to 3259, a 2.2 per cent rise.
Australian and Japanese stock markets have enjoyed similarly good Monday mornings.
The biggest gains on the NZX were being shown by dual-listed financial stocks, with ANZ Banking Group up $2.00 to $23.00 and Westpac up $1.65 to $29.80.
Following its recent bad run, Telecom was up 9c to $2.81, while Fletcher Building surged 22, to $7.20. Contact Energy was up 12 cents to $8.69
The big rise came after sweeping measures by the US government to rescue the financial system and restore confidence in shaky markets spurred a huge relief rally in US stocks on Friday (local time), ending a week when the financial landscape underwent the most dramatic reshaping since the Great Depression.
The benchmark S&P 500 index had its biggest two-day rally since October 21, 1987, two days after the stock market crash.
The Australian stock market opened more that three percent higher, after trading was delayed for an hour today while the Australian Securities Exchange (ASX) sought a clarification from the corporate regulator about its decision to ban short selling of shares in the local market.
The Australian Securities and Investments Commission (ASIC) yesterday said it had widened a ban on ``naked' short selling of stock, announced on Friday, to ``covered' short selling.
The ban, which is expected to last for at least a month, has been introduced to help curb excessive market volatility.
In Japan the Nikkei opened the week's trading up 2 per cent.
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In the US, the Dow Jones industrial average closed up 368.75 points, or 3.35 per cent, at 11,388.44 on Friday. The Standard & Poor's 500 Index advanced 48.57 points, or 4.03 per cent, to 1255.08. The Nasdaq Composite Index shot up 74.80 points, or 3.40 per cent, to 2273.90.
Meanwhile, Treasury Secretary Henry Paulson stressed that time was critical to get the proposed rescue package passed.
He warned that changes to the administration's measure, which was sent to lawmakers on Saturday, could delay its approval, further unsettling global financial markets, which have already seen a number of stomach-churning days as the result of the biggest upheaval on Wall Street since the Great Depression.
Democrats said that the administration's spare three-page plan must be expanded to include help for everyday Americans as well as the big Wall Street financial firms who have lost billions of dollars through their bad investment decisions.
In the past two weeks, the government has taken over the country's two biggest mortgage companies, Fannie Mae and Freddie Mac, and its biggest insurance company, American International Group Inc, and stood by while the nation's fourth-largest investment bank, Lehman Brothers, was forced to declare bankruptcy and another investment giant, Merrill Lynch, was forced to sell itself to Bank of America.
Paulson and Federal Reserve chairman Ben Bernanke made the joint decision last week that the only way to stop the carnage was to deal with the root cause of all the troubles, billions of dollars of bad mortgage debt sitting on the books of major financial companies. This debt has triggered the worst credit crisis in decades, causing credit markets to essentially freeze up last week despite the fact that the Fed joined with major central banks around the world to pump billions of dollars of reserves into the financial system.
The plan the administration has developed with support from the Fed would have the government buy up to US$700 billion of the bad loans, taking them off the books of financial firms with the hope that this will allow those companies to resume normal lending operations.
- NZPA
