Fed Rate Cut Expectations Lift Global Stocks

123jump.com Staff
29 Oct, 2008
New York City

Global stocks advanced on the back of a rally in the U.S. trading. Asian markets surged and European markets traded higher. This morning, stocks in New York edged lower ahead of the Fed decision to lower rates. The speculation is mounting that the Fed may lower rate by as much as 1%.

[R]10:30AM New York – U.S. stocks rally lifted markets around the world. The Fed is expected to lower rates this afternoon.[/R]

U.S. stock rally ahead of rate cut lifted market indexes around the world. Asian markets closed higher and European market in the late afternoon were trading 4% or higher in the region.

In the morning in New York stocks edged lower ahead of rate decision by the Fed this afternoon. Investors are expecting a rate cut of at least 50 basis points. The market has gotten used to lower rates from the Fed chairman Bernanke as the former chairman Greenspan delivered the lower rates, generally heeding to the market demands.

Total durable goods orders in September rose 0.8% to $207.8 billion after declining 5.5% in August. Excluding transportation orders declined 1.1% and excluding defense, new orders fell 0.6%.

China lowered lending and deposit rates for the third time in less than two months. China has been battling slowing economic growth and in the third quarter the rate declined to 9% from 11.9% in the first quarter of this year.

People’s Bank of China lowered the deposit rate to 3.60% from 3.87% and one year loan rates to 6.66% from 6.93%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 589.98 or 7.74% to 8,211.90, Hang Seng index in Hong Kong increased 105.78 or 0.84% closed to 12,702.07. CSI 300 index in China lower 47.60 or 2.79% closed to 1,658.22. ASX 200 index in Australia increased 51.00 or 1.34% to close 3,845.60. The KL Composite index in Malaysia lower 3.03 or 0.36% closed to 829.41.

The Kospi Index in South Korea decreased 30.19 or 3.02% to close at 968.97. SET index in Thailand closed lower 13.89 or 3.49% to 384.15 and JSE Index in Indonesia increased 2.23 or 0.20% to 1,113.62. The Sensex index in India increased 36.43 or 0.40% closed to 9,044.51.

Europe Markets Review

In London FTSE 100 Index traded higher 203.47 or 5.18% to 4,129.85, in Paris CAC 40 Index increased 204.67 or 6.57% to 3,319.59 and in Frankfurt DAX index traded lower 9.51 or 0.20% to 4,813.94. In Zurich trading SMI increased 314.07 or 5.67% to 5,852.61.