Australia's Share Markets
The drastic drop in sharemarkets around the world due to the S&P downgrade of the U.S. credit rating is partly the reason behind the slump in business confidence in Australia. Reuters

The U.S. stock market surged on Friday going into the weekend Eurozone summit on hopes of a grand bailout from authorities.

Already up substantially the past three weeks, the S&P 500 Index rallied 1.88 percent, the Dow Jones Industrial Average rose 2.31 percent, and the Nasdaq Composite climbed 1.49 percent.

Eurozone leaders will discuss the bailout package for the European debt crisis at the weekend summit. France and Germany also promised to unveil it no later than next Wednesday.

Despite the 10 percent-plus rally so far and the possibility that authorities will disappointment, Kate Moore, senior global equity strategist at Bank of America Merrill Lynch, thinks investors should not sell yet.

She thinks they should hold their risk assets and see what policy makers do next week.

Recent macroeconomic data have come in stronger-than-expected and investor sentiment is decidedly bearish, she told CNBC TV.

The unfounded pessimism means many investors are still hoarding cash on the sidelines. The market, therefore, still has room to go higher.

Moore said a comprehensive and big policy response should spark a sustained rally that will take the market up another leg.

U.S.