Asia stocks follow US surge
Nikkei climbs sharply after Wall Street’s rally on positive news from Citigroup.
The broader S&P 500 index rose 43.07, or 6.4 per cent, to 719.60, while the Nasdaq composite rose 89.64, or 7.1 per cent, to 1,358.28.
In a letter to employees on Monday, Vikram Pandit, Citi’s chief executive, said the performance this year has been the bank’s best since the third quarter of 2007, the last time it booked a profit for a full quarter.
Based on historical revenue and expense rates, Citi’s projected earnings before taxes and one-time charges would be about $8.3bn for the full quarter.
Pandit declined to say how large credit losses and other one-time items have been that would at least partially offset profit.
Analysts cautious
Citi’s stock surged 38 per cent and word of the company’s performance broke a months-long torrent of bad news from the banking industry but analysts were not ready to say the stock market was at a turning point.
Kurt Karl, the chief US economist at Swiss Re, cautioned that “one day isn’t going to make a trend”.
“To have a sustained rally, we have to have a shift in sentiment,” he said.
Harry Rady, the chief executive of Rady Asset Management, concurred.
“A little bit of good news went a long way because there was so much pessimism… In the next few weeks or months I’ve got to imagine we’ll give this back. The economy is in an absolute free fall. I’d be very surprised if this was a bottom,” he said.