Asian markets lift after Fed cut
More reassuring news from financial markets. I suspect, however, that this will be a temporary blip. What confuses me is that the only solution to the problem which the Fed tables is rate cuts. But rate cuts simply stimulate more borrowing which perpetuates the problem, no? Perhaps, because the Fed rate cut has not trickled down to mortgages, which are more closely tied to long term bond rates, it is a more precise stimulus than it appears.
Asian markets have continued a rally started in the US after its Federal Reserve cut interest rates by 0.75%.
In Japan, the Nikkei index jumped more than 3%, while shares in Australia, Taiwan and South Korea rose by 2%.
On Wall Street on Tuesday, the Dow Jones stock index recovered from recent losses and registered its biggest one-day gain for more than five years.
Although the credit crunch may not be over, investors have been reassured the Fed is in control, correspondents say.
The US central bank's action was aimed at averting a financial panic after investment bank Bear Stearns was forced into a fire sale to avoid collapse.