A big turnaround in stocks on Tuesday. Again, it started in Asia. From Bloomberg:
Asian stocks climbed, snapping four days of declines, as investors speculated recent losses were overdone and the yen dropped.
Hong Kong's Hang Seng Index rallied 14 percent, rebounding from its biggest decline in a decade...
The Nikkei 225 gained 6.4 percent. Finance Minister Shoichi Nakagawa said restrictions on short-selling of shares will take effect today to bolster the stock market.
US stocks started out hesitantly but finished the day with a flourish. Bloomberg reports:
Stocks rallied and the Dow Jones Industrial Average posted its second-best point gain as the cheapest valuations in 23 years lured investors and increased commercial paper sales signaled credit markets are thawing...
The Standard & Poor's 500 Index gained 91.59 points, or 11 percent, to 940.51 after sliding to the lowest level since March 2003 yesterday. The Dow climbed 889.35 points, or 11 percent, to 9,065.12...
Like Monday, Europe again showed the least movement, the DJ Stoxx 600 rising 2.3 percent.
Meanwhile, there were further signs that credit conditions are improving. From Bloomberg:
The London interbank offered rate, or Libor, that banks charge each other for three-month loans in dollars fell 4 basis points to 3.47 percent today, its 12th straight drop, according to the British Bankers' Association. The comparable euro rate slid 5 basis points to 4.85 percent, the lowest level since April 28.
And investors continue to move out of safe havens. US bonds fell, the yield on 10-year notes rising 18 basis points to 3.86 percent and the two-year yield increasing 5 basis points to 1.58 percent, while the yen fell sharply against both the US dollar and the euro.
But Iceland couldn't wait for a return of risk appetite. From Bloomberg:
Iceland's central bank unexpectedly raised the benchmark interest rate by six percentage points to the highest level in at least seven years to boost the currency after reaching a loan agreement with the International Monetary Fund.
The rate was lifted to 18 percent, the Reykjavik-based bank said in a statement today, taking it to the highest since the bank began targeting inflation in 2001.