Markets Bounce Back
Asia continues rally after Wall Street staged its biggest one-day rise in more than five years following an aggressive interest rate cut by the Fed
Markets in Asia continued the rally begun on Wall Street after the Federal Reserve took the emergency action of cutting interest rates by three-quarters of a point.
In Japan the Nikkei index closed 2.5% higher today, shares in Australia were up 4% and the Hang Seng in Hong Kong closed 2.4% higher. Markets in South Korea, China and India were also sharply up.
In London, the FTSE 100 opened up 25 points at 5,630.8. Yesterday, it gained almost 200 points, regaining almost all of Monday's losses.
Wall Street staged its biggest one-day rally in more than five years yesterday after the aggressive action by the Fed, even though the cut was smaller than many in the markets had hoped for.
The Dow Jones industrial average soared 420 points, 3.51%, to 12,392.66. The S&P 500, the broader gauge of US stocks, climbed 4.24% to 1,330.74, the highest gain in a single session since October 2002.
The markets nerves were also soothed by earnings statements from Goldmans Sachs and Lehman Brothers. While profits at both were down sharply, they were better than expected, and also calmed fears that another big bank might be heading the way of Bear Stearns.
The interest rate cut was aimed at restoring some confidence in the financial system, which was severely rattled by the near collapse of Bear Stearns last week and its cut-price rescue by rival JP Morgan.
The US treasury secretary Henry Paulson said yesterday that the US economy was facing a "sharp decline", although he still hoped that it might stage a recovery later this year. He avoided using the word recession.
Analysts warned however that the bounce on the markets does not mean that recent turmoil is at an end. "We're just back to where we were at the beginning of the week," said David Cohen, a regional economist with Action Economics in Singapore. "The roller coaster will continue. There's a lot of uncertainty continuing for the world and US economies."
The Nikkei has fallen around 20% so far this year and has dipped to levels not seen since the end of 2004.
The Shanghai Composite index ended trading 3.6% higher, after five straight days of losses.
In Japan the Nikkei index closed 2.5% higher today, shares in Australia were up 4% and the Hang Seng in Hong Kong closed 2.4% higher. Markets in South Korea, China and India were also sharply up.
In London, the FTSE 100 opened up 25 points at 5,630.8. Yesterday, it gained almost 200 points, regaining almost all of Monday's losses.
Wall Street staged its biggest one-day rally in more than five years yesterday after the aggressive action by the Fed, even though the cut was smaller than many in the markets had hoped for.
The Dow Jones industrial average soared 420 points, 3.51%, to 12,392.66. The S&P 500, the broader gauge of US stocks, climbed 4.24% to 1,330.74, the highest gain in a single session since October 2002.
The markets nerves were also soothed by earnings statements from Goldmans Sachs and Lehman Brothers. While profits at both were down sharply, they were better than expected, and also calmed fears that another big bank might be heading the way of Bear Stearns.
The interest rate cut was aimed at restoring some confidence in the financial system, which was severely rattled by the near collapse of Bear Stearns last week and its cut-price rescue by rival JP Morgan.
The US treasury secretary Henry Paulson said yesterday that the US economy was facing a "sharp decline", although he still hoped that it might stage a recovery later this year. He avoided using the word recession.
Analysts warned however that the bounce on the markets does not mean that recent turmoil is at an end. "We're just back to where we were at the beginning of the week," said David Cohen, a regional economist with Action Economics in Singapore. "The roller coaster will continue. There's a lot of uncertainty continuing for the world and US economies."
The Nikkei has fallen around 20% so far this year and has dipped to levels not seen since the end of 2004.
The Shanghai Composite index ended trading 3.6% higher, after five straight days of losses.
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