Euro, Asian Markets Rebound After Fed Move
August 10, 2011 by UPI - United Press International, Inc.
NEW YORK, Aug. 10 (UPI) — European and Asian stocks rebounded Wednesday before Wall Street’s opening bell on a Federal Reserve pledge to keep U.S. interest rates near zero for two years.
British, German and French stock indexes rose more than 2 percent in early-morning trading following a “relief rally” in Asian markets.
In late-afternoon trading, Hong Kong’s Hang Seng index was up more than 3.25 percent and Seoul’s Korea Composite Stock Price Index gained more than 2 percent, recouping some of Tuesday’s losses during an extraordinarily volatile session that included a plummet of nearly 10 percent at one point.
Tokyo’s Nikkei 225 index was slightly more than 1 percent higher on fears a strengthening yen would hurt exporters.
Indexes in Taiwan, the Philippines and mainland China were also higher.
In Australia, the Standard & Poor’s/ASX 200 advanced more than 2.5 percent, and New Zealand’s NZX 50 index reversed a three-day decline, jumping more than 3 percent.
The U.S. dollar fell against the Japanese yen and the euro.
The price of gold — considered a safe haven at times of uncertainty — rose to about $1,755 a troy ounce.
Oil also rose, climbing more than $2 to top $81 a barrel. Crude was almost $115 a barrel in May.
The moves came after U.S. stocks surged broadly late Tuesday following the Fed’s statement it would hold short-term interest rates near zero for at least two more years to support the faltering U.S. economy.
The Fed, which has kept its benchmark interest rate near zero since December 2008, previously pledged to keep rates low for an “extended period,” a phrase usually taken to mean several months.
The central bank — which said it expected slow U.S. economic growth, with high unemployment and subdued inflation — also said it was “prepared to employ” a “range of policy tools” to spur the U.S. economy.
The Dow Jones industrial average jumped nearly 4 percent Tuesday and the S&P 500 stock index rallied 4.7 percent — in sharp contrast to Monday, when Wall Street recorded its worst day since 2008.
U.S. stocks peaked in October 2007, when the Dow exceeded 14,000 points. It then entered a pronounced decline, which accelerated markedly in October 2008. By March 2009, the Dow reached a trough of around 6,600.
It has since recovered much of the decline, exceeding 12,000 for most of the first half of this year but closing at 11,239.77 Tuesday.
S&P futures were up Wednesday morning.