Markets jump as investors cheer interest rate cuts
World stock markets raced upwards on Thursday, with Asian indices soaring by about 10 percent, as interest rate cuts sparked bargain hunting after months of misery over the global financial crisis.
Hong Kong shares rocketed 12.8 percent and Tokyo surged 9.96 percent-the fourth-biggest gain ever as a weaker yen provided a boost to exporters.
Investors shrugged off a weak overnight lead from Wall Street after the US Federal Reserve slashed its key lending rate by a half-point to 1.0 percent.
"Yesterday's rate cut from the Fed was completely expected, however the prospect for more rate cuts in coming months are increasing traders' risk appetite," said Martin Slaney, head of derivatives at GFT Global Markets.
"Asian and European markets have responded well and there is a palpable change in sentiment to the upside."
Seoul surged 11.95 percent, their biggest ever rise, and Singapore won 7.8 percent after the Fed reached a currency swap deal with central banks of South Korea, Singapore, Brazil and Mexico to help them cope with the credit crisis.
Investors welcomed interest rate cuts in the United States, China, Hong Kong and Taiwan -- part of efforts by global banks to avert a financial system meltdown. There was speculation Japan's central bank might follow suit.
In Europe, the Frankfurt market gained 4.58 percent, London was up 1.59 percent and Paris rose 0.97 percent in late morning deals.
"Last night's (US) rate cut... will have encouraged more (investors) to move from cash into equities as they hunt out a better yield," added Iain Griffiths, a dealer with CMC Markets in London.
Comments