6 Mar 2013

NZ market up after Dow reaches all-time high

6:50 pm on 6 March 2013

The New Zealand share market rose 0.7% on Wednesday, following strong performances in American and European markets.

The NZX50 index was up 28 points to close at 4,297 on turnover of $211 million.

The Dow Jones share index in New York set a new all-time high on Tuesday, returning to levels not seen since before the global financial crisis.

The Dow reached 14,285 during the day, exceeding the previous record intra-day high of 14,198, set in October 2007 and closed slightly lower at 14,256. The Standard & Poor's 500 Index gained 1%, while the Nasdaq climbed 39.61 points, or 1.24%.

The Dow has more than doubled in value since it sank to less than 6,550 points in the depth of the crisis in March 2009.

In London, the FTSE 100 closed at 6,432 - its highest close since January 2008, while the DAX in Frankfurt climbed 2.3% and the CAC-40 in Paris gained 2% on Tuesday.

The recovery in the market suggests investors are regaining confidence in the United States economy, despite an ongoing fiscal crisis in Washington.

Investors were encouraged by data released on Tuesday suggesting that non-manufacturing industries in the US, which account for about 90% of the economy, continued to expand last month.

The Institute for Supply Management said its services index rose to 56 in February from 55.2 in January - its highest level in a year.

The BBC reports investors have also been encouraged by signs of recovery in the American housing market in recent months and a return of consumer confidence.

Analysts also say the commitment of central banks to quantitative easing and low interest rates has helped create optimism among investors, and made stocks and shares more attractive than bonds.

On Monday, Federal Reserve vice chairman Janet Yellen said the bank should press on with its QE programme, in which it spends $US85 billion a month on buying bonds.