Perhaps it is because so many banks in Europe and Asia hold preferred shares in Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE). Perhaps it is because the government takeover of the firms is viewed as a way to drop mortgage rates in the US and help housing. Whatever the reason, the move by the US government caused furious rallies in stocks in both Asia and Europe.
The Nikkei rose over 3% and the Hang Seng was up over 4%. Shares in big banks in mainland China which are believed to hold paper in the two US agencies rose over 4%. HSBC (NYSE: HBC) stock also had a sharp spike.
In Europe, Reuters reports that the FTSE and Daxx indexes were up over 3% and shares in UBS (NYSE: UBS) moved up 11%. Stocks in other major banks were up over 5%.
Watch for a tremendous rally at the open of US markets, whether the government's moves on Fannie and Freddie will help the US housing market long-term or not.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
9-08-2008 @ 6:18AM
al coholic said...
America is turning into a fiefdom ruled by politions.