WEBODIGY Business & Finance Journal

Global stock markets began the New Year on a positive note as investors counted on a strong recovery from the worst economic slump since the 1930s to extend substantial gains made in 2009, dealers said.

They said strong Chinese manufacturing data showing the world’s third largest economy clearly on the mend bolstered hopes that the worst of the downturn is well and truly over, with the despair and uncertainty of 12 months ago fading into memory.

A similarly positive US manufacturing sector report later in the day gave Wall Street a solid early boost, reinforcing the more positive outlook.

Financial markets appeared on the brink of collapse in late 2008 with the failure of US investment banking giant Lehman Brothers but sentiment turned in March last year as the first “green shoots” of recovery were seen after huge state stimulus programmes.

Dealers said the big question now is whether the momentum can be sustained as governments wind down their costly rescue programmes.

In New York, the Dow Jones Industrial Average of leading shares was up 1.57 percent at around 1700 GMT, with the tech-heavy Nasdaq composite gaining 1.78 percent.

“There is a bullish bias that is often associated with the start of a new year as new money gets put to work, riding the wave of typically upbeat forecasts,” said Patrick O’Hare at Briefing.com.

In Europe, Paris was the main feature, topping very strong resistance at 4,000 points as investors pushed the CAC 40 up 1.97 percent to 4,013.97 points, its best finish since October 2008.

“Everybody was expecting it and finally it happened,” said Xavier de Villepion of Global Equities, adding that investors will be closely looking at upcoming US data to confirm they are on the right track.

London’s FTSE 100 index of leading shares rose 1.62 percent to 5,500.34 points while in Frankfurt the DAX added 1,53 percent to 6,048.30 points.

Dealers said that apart from the data, European stocks got an additional boost from news that Swiss pharmaceutical giant Novartis was to spend nearly 40 billion dollars to take over the world’s biggest eye-care firm Alcon from Nestle.

James Hughes, Market Analyst at CMC Markets, said that after a positive opening, the US manufacturing data gave investors another boost.

“Shares managed to add to this morning’s gains … after a strong start on Wall Street. The (US) ISM manufacturing numbers seemed to be a catalyst, as was a surge in the oil price,” Hughes said.

The US manufacturing sector in December expanded at its fastest pace since April 2006 as factories ramped up production to make up for a massive drawdown in inventories, the Institute for Supply Management said.

The ISM purchasing managers index climbed to 55.9 percent in December from 53.6 percent in November, well above analyst forecasts for a rise to 54.3 percent. Any number above 50 percent indicates growth.

“Overall, the December survey points toward sturdy growth in manufacturing industrial production,” said Ryan Sweet at Moody’s Economy.com.

Elsewhere in Europe, Amsterdam gained 2.30 percent, Brussels was up 2.08 percent, Madrid rose 1.72 percent and Swiss stocks put on 1.31 percent.

London and Paris each gained more than 22 percent in 2009, with Frankfurt up nearly 24 percent.

In Asia early Monday, Tokyo struck 15-month high, buoyed by government plans to expand a credit line to troubled Japan Airlines, with the benchmark Nikkei-225 index jumping 1.03 percent to 10,654.79 points — the best finish since early October 2008.