9 Aug 2008

Rally on Wall Street as oil slides

9:30 am on 9 August 2008

Stocks in the United States soared on Friday as oil plunged below $US115 a barrel to its lowest level in three months.

The rise was despite a loss of $US2.3 billion in the three months to 30 June at mortgage finance company Fannie Mae.

The Dow Jones industrial average rose 302.89 points, or 2.65%, to 11,734.32.

Standard & Poor's 500 Index jumped 30.25 points, or 2.39%, to 1,296.32. The Nasdaq Composite Index gained 58.37 points, or 2.48%, to 2,414.10.

For the week, the Dow gained 3.6%, the S&P 500 advanced 2.9% and the Nasdaq shot up 4.5%. It was the best week for all three indexes since 20 April.

Shares of Fannie Mae dropped 9.1% to $9.05 after the company posted a fourth straight quarterly loss and slashed its dividend by more than 85% to conserve capital.

Trading volume was low on the New York Stock Exchange, with about 1.24 billion shares changing hands. About 2.23 billion shares were traded on the Nasdaq.

US light crude settled down $US4.82 to $US115.20 a barrel, before falling to $US114.90 in post-settlement trade - its lowest level since early May. London Brent crude settled at $US113.33, down $US4.53.

The US dollar reached five-month highs against a broad range of currencies.

Europe's main stock markets also closed higher.

The FTSEurofirst 300 was up 0.65% at 1197.85.

In Paris the CAC 40 rose 0.77% to 4,491.85, while in Frankfurt, the Dax ended 0.28% higher at 6,561.65.

In London: the FTSE 100 index added 0.21% to close at 5,489.20.

NZ & Australia

The New Zealand share market took a dive on Friday as the NZX 50 index fell 21 points to 3358 on turnover of $113 million.

Telecom was down 28 cents to $3.40. Contact Energy was up 10c to $8.70 and Fletcher Building was down 11c to $6.69.

GPG was up 9c to $1.55 after selling its stake in Tower Australia for a profit of $A220 million. Tower was up 6c to $2.16.

Fisher & Paykel Appliances was up 8c to $2.11. New Zealand Oil & Gas was down 2c to $1.55.

The New Zealand dollar continued to drift downwards, buying US70.32 cents, 78.36 Australian cents, 36.40 pence, 77.00 yen and 0.4611 euro. The Trade Weighted Index was 64.37.

The Australian share market closed flat on Friday. The S&P/ASX200 index was up 2.9 points to 4986.2, while the All Ordinaries gained 7.6 points to 5037.6.

The September share price index futures contract fell one point to 4974 on a volume of 20,846 contracts.