(NVONews.Com) US stock market today surged ahead thanks to the finalisation of fiscal cliff agreement. The fiscal deal had a positive impact on the stocks throughout the world on Wednesday on the first day of trading in 2013. While they soared in the United States, stocks posted strong gains in Asian, Australian and European markets. Government bonds in weaker eurozone economies rally as investors’ appetite for riskier assets rose after the threat of an immediate hit to growth in the US economy got diminished.
All major global markets opened after closure on Tuesday. Indices in Australia and Asia, especially in the east, provided the first clues about sentiment of investors.
Australia’s ASX All Ordinaries index added 1.3%. South Korea’s KOSPI gained 1.7% and the Hang Seng in Hong Kong advanced 2.2%.
Tokyo’s Nikkei and the Shanghai Composite remain closed for holiday celebrations, but will reopen later in the week.
On Wednesday morning, the FTSE-100 broke through 6,000 points for the first time since July 2011, adding 1.8%. Other major European indices posted similar gains. But yields on Spanish and Italian government bonds fell sharply.
In India the Bombay Stock Exchange benchmark Sensex shot up 133 points to hit two-year high on increased buying in consumer durables and capital goods stocks amid persistent capital inflows after the US Congress approved a deal to avert “fiscal cliff”.
After opening on a strong footing at 19,693.30 points, the benchmark continued its upward march to touch session’s high of 19,756.68 before settling 133.43 points, or 0.68 per cent higher at 19,714.24 points. This is its highest closing since January 6, 2011.
The 50-scrip National Stock Exchange index Nifty, which breached the 6,000 mark during the session for the first time since January 2011, slipped back partially to close at 5,993.25 points, gaining 42.40 points, or 0.71 per cent. It touched session’s high of 6,006.05.
The gains in the US come after stocks ended 2012 with their strongest day in more than a month, which put the S&P 500 up 13.4 percent for the year, after a flat performance in 2011.
The S&P 500 was on target for its highest close since October 19.
The rally was broad-based, with nine stocks rising for every one falling on the New York Stock Exchange. All 10 S&P 500 industry sector indexes rose at least one percent, led by the S&P financial index .GSPF, up 2.2 percent.
The S&P Information Technology index .GSPT gained 2.1 percent. Among the strongest names in the sector was Hewlett-Packard (HPQ.N), which climbed nearly five percent to $14.95. HP’s gain followed a miserable 2012, when the stock fell nearly 45 percent.
The Dow Jones industrial average finance/markets/index gained 223.60 points, or 1.71 percent, to 13,327.74. The Standard & Poor’s 500 Index .SPX advanced 24.61 points, or 1.73 percent, to 1,450.80. The Nasdaq Composite Index .IXIC climbed 66.87 points, or 2.21
Bank of America Corp (BAC.N) rose 3.4 percent to $11.99 and Wells Fargo (WFC.N) shares added 2 percent to $34.87. JPMorgan Chase & Co (JPM.N) shares rose 1.5 percent to $44.34.
Shares of Zipcar Inc (ZIP.O) jumped 48.4 percent to $12.23 after Avis Budget Group Inc (CAR.O) said it would buy Zipcar for about $500 million in cash to compete with larger rivals Hertz and Enterprise Holdings Inc. Avis rose 4.5 percent to $20.72.
Shares of Apple (AAPL.O) rose 2.4 percent to $545, boosting technology stocks, following a report that the most valuable tech company has started testing a new iPhone and a new version of its iOS software. Apple stocks struggled in the final weeks of 2012 before a rally to end the year
Investors are feeling confident heading into 2013 following a year of strong equity market returns, and the recently signed deal.
However, experts are of the view that the fiscal cliff deal left a range of big issues unresolved and thus the positive market reaction could dissipate quickly.
According to Joe Rundle, head of trading at ETX Capital in London “today’s bullish tone may continue as we head toward the weekend but the euphoria will most certainly evaporate as the deal voted through does not include raising the debt ceiling and longer term budget cuts.”