Open

Coming up

Don't miss

Replay


LATEST SHOWS

LIFESTYLES

New road trip

Read more

LIFESTYLES

High-tech in France

Read more

DOWN TO EARTH

Global warming: A drowning planet

Read more

THE BUSINESS INTERVIEW

Christian Kastrop, Director of Policy Studies, OECD

Read more

MEDIAWATCH

Sarkozy's political comeback: Did he ever leave?

Read more

ENCORE!

Weekly Music Show: Tony Bennett and Lady Gaga's new album

Read more

THE OBSERVERS

Revolt in New Caledonia and rebuilding homes in Libya

Read more

IN THE PAPERS

UK coalition split on 'English votes for English laws'

Read more

WEB NEWS

Ukraine: Activists launch 'Blood Bucket Challenge'

Read more

Asia-pacific

Asian markets rise on Fed's low interest rates pledge

Video by Luke SHRAGO , Catherine Nicholson

Text by News Wires

Latest update : 2011-08-10

Asian markets bounced back Wednesday after the US Federal Reserve pledged to keep interest rates at record lows for the next two years amid fears of a double-dip US recession after growth proved more sluggish than expected in the first half of 2011.

AP - Asian stock markets jumped Wednesday following a surge on Wall Street triggered by a Federal Reserve pledge to keep interest rates super low for the next two years to help the ailing U.S. economy. Oil prices rose to near $82 a barrel, while the dollar slid against the yen and the euro.

The Dow Jones industrial average finished Tuesday with a 429-point gain after the Fed said it would keep its key interest rate at a record low of nearly zero through the middle of 2013. The index dived 634.76 points the day before after Standard and Poor’s cut the U.S. government’s credit rating, sending shock waves through global markets.

The U.S. central bank also said it discussed “the range of policy tools” it can use to spur the economy.

Still, analysts warned investors to brace for more sharp swings in markets amid a dearth of signs of improvement in the global economy. “There is a lot of fear and uncertainty in the market, and negatives will add to that. So if we see an increase in unemployment from the U.S., that is going to cause an increase in volatility,” said Samuel LeCornu, portfolio manager at Macquarie Funds Group in Hong Kong.

Japan’s Nikkei 225 index climbed 1.3 percent to 9,057.84 following a 7.6 percent loss in the last three days. Export shares, however, continued to struggle because of the strong yen, which hurts the country’s export-driven economy by reducing the value of foreign earnings. Honda Motor Co. lost 1.5 percent and rival Toyota Motor Corp. was down 0.4 percent. Consumer electronics giant Sony Corp. fell 2 percent. Hong Kong’s Hang Seng jumped 3.3 percent to 19,963.60. Australia’s S&P/ASX 200 index rose 2.6 percent. Indexes in Taiwan, the Philippines and mainland China were also higher.

South Korea’s Kospi, which at one point Tuesday plummeted nearly 10 percent, gained 1.3 percent to 1,823.85. Samsung Electronics, the top global manufacturer of flat screen televisions, memory chips and liquid crystal displays, gained 0.7 percent.

Gains in Asia were broad-based, with banking shares among the key movers. Australia’s Westpac Banking Corp. was 5.1 percent higher and National Australia Bank Ltd. gained 5.7 percent. Bank of China rose 3.7 percent. Industrial and Commercial Bank of China, the world’s biggest bank by market value, gained 2.6 percent.

Shares in airlines, benefiting from expectations that lower oil prices will reduce jet fuel costs, were also sharply higher. Hong Kong-listed Air China climbed 4.8 percent. South Korea’s Asiana Airlines climbed 3 percent and Taiwan’s EVA Airways Corp. soared 5.5 percent. Worries about the U.S. economic recovery have been building since the government said that economic growth was far weaker in the first half of 2011 than economists expected. In a reversal of earlier forecasts, economists now believe there is a greater chance of another U.S. recession because the economy grew much more slowly in the first half of 2011 than previously thought.

The manufacturing and services industries barely grew in July. The unemployment rate remains above 9 percent, despite the 154,000 jobs added in the private sector in July.
Economies across the globe are also struggling.

Concerns are growing that Spain or Italy could become the next European country to be unable to repay its debts. High inflation in less-developed countries, which have been the world’s main economic engine through the recovery, is another concern. China’s inflation rose to a 37-month high in July.

Benchmark oil for September delivery was up $2.66 to $81.96 a barrel in electronic trading on the New York Mercantile Exchange. In London, Brent crude was up $2.68 to $105.17 per barrel on the ICE Futures exchange. The dollar sank to 76.92 yen from 77.01 yen late Tuesday in New York. The euro strengthened to $1.4343 from $1.4222.
 

Date created : 2011-08-10

  • USA

    US markets rally at close after volatile session

    Read more

  • MARKETS

    Wall Street halts slide, Europe sees modest rise

    Read more

  • COMMODITIES

    Gold skyrockets as investors flee volatile markets

    Read more

COMMENT(S)