Asian Markets Head Up, As New Stimulus Plans Are Developed

Asian trade: Asian markets opened higher for the first trading session of this week, as the major governments appear again ready to step into the financial markets.

In the U.S., talks are focusing on a “bad debt bank”. Authorities are planning to create a bank that would buy all the toxic loans from banks, taking a burden off their balance sheets, a solution that was previously implemented with success in the U.S., during the insolvency of the savings and loans associations.

In the U.K., the government plans to underwrite most of the bad debt on the bank’s balance sheets. It is expected that banks would have to pay a fee and support the first part of the losses. In addition, it is said, that government would also guarantee mortgages and corporate loans worth of 100 billion pounds, taking value of the bank rescue plan to at least 350 billion pounds.

Tonight, Asian markets closed higher. The Nikkei gained 62.92 points (0.76%) to 8,293.07. The Australian S&P/Asx rose 22.10 points (0.62%) to 3,573.00.

Crude oil was sold somewhere lower, as a peace treaty was signed in the Gaza conflict. Crude oil for February delivery fell $0.30 to $36.20.

Gold moved slightly lower, in-line with crude oil. Bullion for immediate delivery lost $2.30 to $837.60.

Previous Wall Street trade: After a volatile session on Friday due in part to expiring options, at the close of floor trading on the NYSE, the DOW was on 8281.22 after gaining 68.73 points (0.83%) while the S&P finished on 850.12, up 6.38 points (0.76%). The NASDAQ was the big gainer for the day, closing on 1529.33 with a gain of 17.49 points (1.16%). Bonds were sold on speculation the government would further support the financial system by either taking troubled assets off the banks hands or guaranteeing them. The yield on the 2-year note rose 3.1 basis points to 0.729% while yield on the benchmark 10-year note rose 11.9 basis points to 2.318%. The dollar ended up looking as if it was trading in risk-acceptance mode, falling 1.46% on the euro, 0.72% to the pound and 1.58% against Australia's currency as it rose 0.92% to the yen.

Previous European trade: In Europe, the U.K. Ftse rose 25.95 points (0.63%) to 4,147.06, while the German Dax rose 29.55 points (0.68%) to 4,451.90.