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Asian stock markets are rebounding Wednesday morning following a 4.3% rebound of the Dow Jones Industrial Average in the US, Tuesday. US stocks opened higher and after the Federal Reserve promised to keep US interest rates low for the next two years stock, soared.

"The benchmark Japanese Nikkei N225 was up 1.6 percent at 9,085.34 in mid-morning trade, after climbing as high as 9,144.33. The broader Topix .TOPX gained 1.3 percent to 780.28."

Earlier in the day I provided a more complete discussion of the Federal Reserves impact on the US market in Dow Closes Up 3.98%, S&P 500 Up 4.75%, As Federal Reserve Promises Low Interest Rates For Two Years.
 .

Alex Richardson, of Reuters reports, Asia stocks bounce after Fed move stems rout.

SINGAPORE (Reuters) - Asian stocks rebounded on Wednesday, following a jump in U.S. shares, after the Federal Reserve made an unprecedented pledge to keep interest rates near zero for at least two years, stemming a global equity rout for the time being.

But investors remained wary about implication of the central bank's move -- that it expects the U.S. economy to remain weak far longer than previously forecast -- supporting demand for safe havens such as gold and the Swiss franc.

MSCI's all-country world stock index .MIWD00000PUS remained about 17 percent below its May peak on Wednesday, after slipping as far as 20 percent, the generally accepted definition of a bear market, on Tuesday.

The dollar dipped to around 77.00 yen, not far from the all-time trough of 76.15 reached in mid-March. The euro also touched a record low against the Swiss franc at around 1.0075, before recovering some ground to 1.0384 francs. But the single currency jumped on the dollar to $1.4350, putting more distance from last week's trough around $1.4054.

Gold firmed from late New York levels to around $1,755 an ounce, after striking the latest in a string of records around $1,778 on Tuesday.

U.S. crude oil climbed back above $80 a barrel, rising more than 2 percent to trade around $81.05.

What a rollercoaster couple of weeks this has been.  

For now, the downward spiral seems to be broken, with global stocks going into a second day of rising asset prices.

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Comment Preferences

  •  Tip Jar (8+ / 0-)

    The means is the ends in the process of becoming. - Mahatma Gandhi

    by HoundDog on Tue Aug 09, 2011 at 08:09:49 PM PDT

  •  The Fed and the market both (2+ / 0-)
    Recommended by:
    psilocynic, JVolvo

    Are pricing in a deflationary recession (or at least zeroish growth for the next two years). This is not good news.

    (-5.50,-6.67): Left Libertarian
    Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

    by Sparhawk on Tue Aug 09, 2011 at 08:15:11 PM PDT

    •  Of course... (0+ / 0-)

      ...Keynesians think the low rates are a good time to pile more rocks on our already faltering backs.

      (-5.50,-6.67): Left Libertarian
      Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

      by Sparhawk on Tue Aug 09, 2011 at 08:16:48 PM PDT

      [ Parent ]

      •  Why do you say this sparhawk. (4+ / 0-)
        Recommended by:
        pstoller78, grover, JVolvo, randomfacts

        I agree with Robert Reich, Paul Krugman, and Joseph Stiglitz that we need as much fiscal stimulus as we can get.

        I don't see how a little monetary stimulus would hurt.

        Unemployment is still over 9%

        You can't possible favor higher interest rates can you?

        The means is the ends in the process of becoming. - Mahatma Gandhi

        by HoundDog on Tue Aug 09, 2011 at 08:38:41 PM PDT

        [ Parent ]

        •  With 2 trillion needed right now (3+ / 0-)
          Recommended by:
          HoundDog, grover, JVolvo

          just to repair our crumbling infrastructure  it's not like there is s shortage of things to be done.  And look these are things that must be done anyways, and in many cases deferring them to the future will be more costly as the repair costs can increase significantly if allowed to decay further.

          •  Exactly, we should be using highway funds to (3+ / 0-)
            Recommended by:
            pstoller78, grover, JVolvo

            repair roads, bridges, and other public works.

            We should be upgrading our electrical grids.

            We should be giving tax incentives for folks to install solar, wind, geothermal, and other renewable energy.

            John Kerry is advocating an infrastructure bank, which sounds good.

            Also, a steady small inflation rate of around 3% to 4% would be a way to deal with some of this debt overhang.

            If we raised interest rates now, it would likely tank the housing market putting many more poor, and middle class homeowners under water.

            The means is the ends in the process of becoming. - Mahatma Gandhi

            by HoundDog on Tue Aug 09, 2011 at 08:53:38 PM PDT

            [ Parent ]

          •  EU and India spend 5-6% of GDP (4+ / 0-)
            Recommended by:
            HoundDog, pstoller78, grover, JVolvo

            650-750billion a yr, assuming we've been spending that every year, we havent, we spend 2.4% of GDP.

            I could see 7-8% of GDP being spent on infrastructure, to sort of catch up. Another 5-7% of GDP on  jobs stim, solar wind smartgrid etc.

            I'd settle for 1.5 trillion after asking for 2.

            for 5 years. EAch year.

            FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

            by Roger Fox on Tue Aug 09, 2011 at 09:07:19 PM PDT

            [ Parent ]

  •  This may not be (1+ / 0-)
    Recommended by:
    grover

    somber enough for some of the more serious among us, but I thought it was a hoot, and I've spent a whole lotta years watching this stuff -- a Guardian opinion column about how competitive Americans are and what the S&P rating means, if anything.

    The writer very deftly puts pretty much everyone involved in his place.

    I still think the wars in Iraq and Afghanistan were and are unnecessary, the whole "war on terror" is just a reaction to self-induced fear. I still think there is a war on women. -- from LaFeminista

    by Mnemosyne on Tue Aug 09, 2011 at 09:19:39 PM PDT

  •  All's you need to understand is that beyond (1+ / 0-)
    Recommended by:
    JVolvo

    the financial questions this is ultimately a political crisis not a monetary one.

    No economic leadership and no policy other than secure the bond holders and guarantee the assets.

    The Fed already realizes we're in the midst of a liquidity trap. Pushing on a string in a mobious loop.  QE3 would be pointless.

    The Recovery has to start in the real world with employment. That is unavoidable now that the illusion of a jobless recovery has finally been revealed as insanity.

    The Fed knows this but hasn't the will or a plan.  The fiscal policy is now mute in the wake of debt ceiling debacle. And we must all soldier on through a new political terrain of employing armies of speech writers ( a WPA program?) to talk "Jobs,jobs,jobs for 2012.  Green Jobs. New Jobs. Green eggs and Jobs.

     

    NO CE/CW. NO UNION BUSTING

    by Aeolos on Tue Aug 09, 2011 at 10:14:43 PM PDT

  •  I think there are 3 factors (0+ / 0-)

    First, although Japan and China, the largest holders of T-bonds had urged Congress to act more responsibly and in the case of China issued a sharp rebuke (vis a vis Xinhua) after S&P downrated the bonds, both had also clearly stated they would continue to support the bonds in a downrate (they haven't much choice, actually) and stuck to that, China making a strategic buy in the first day. Thus, T-bonds actually rose slightly as the market fell.

    Second, as you say, the interest rate announcement reversed the trend in the US markets and Asia followed this morning.

    Third, as early as yesterday afternoon in the Tokyo and Shanghai markets there was a late rally as bargain hunters came in the last couple of hours to buy shares, pretty predictable give the huge 2 day decline which knocked as much as 20% off some attractive issues, and I think this is also a factor in the US market rally.

    What about my Daughter's future?

    by koNko on Tue Aug 09, 2011 at 10:21:18 PM PDT

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