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2009 gets off to a good start, though oil prices a concern

  • Global equity markets shrug off higher oil prices to send aviation stocks higher in start of trading in 2009;
  • A late Santa rally, as the economic outlook remains bleak.

Global stock markets have started on a positive note in 2009 after a disastrous 2008. US stocks rallied in the first trading day of 2009, with the Dow Jones Industrial Average surging 2.9%, while European stocks also rose strongly.

Airport shares were broadly higher, led by Copenhagen Airports (+6.7%), whose main customer, SAS is the subject of renewed takeover interest by Lufthansa (+4.0%).

Selected airports daily share price movements (% change): 02-Jan-08

SAS shares soared 15.3%, while Vueling (another consolidation participant, in Spain) gained 14.6%. Investors liked Air France-KLM's (+6.9%) moves to acquire a 25% stake in the new Alitalia.

European selected airlines daily share price movements (% change): 02-Jan-08

Asian airline shares were led by strong performances by SpiceJet (+7.3%) and Singapore Airlines, which opened 2009 up a healthy 5%.

Asia Pacific selected airlines daily share price movements (% change): 02-Jan-08

Various aviation suppliers also had a strong day, led by lessor, AerCap.

Selected Aviation suppliers daily share price movements (% change): 02-Jan-08

US airline shares were also broadly higher, led by US Airways (+8.5%), despite further increases in the price of oil on expectations OPEC will carry out its largest production cut ever, and escalating violence in Gaza. Light sweet crude for February delivery (Nymex) rose USD1.74 (+3.9%) to settle at USD46.34 per barrel on 02-Jan-09, capping a 23% increase in the oil price in a week - the biggest weekly percentage gain since Aug-1986.

North America selected airlines daily share price movements (% change): 02-Jan-08

But share prices will be driven in 2009 by the outlook for the economy and associated merger and acquisition activity. The global economic outlook remains bleak, particularly for the world's largest economy, the US. Consumer Confidence in the US fell to a new all-time low in Dec-08, with the The Conference Board noting the overall economic outlook "remains quite dismal for the first half of 2009", with only a "modest recovery" in the second half.

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