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Asian markets lift after Fed cut Asian markets lift after Fed cut
(about 3 hours later)
Asian markets have continued a rally started in the US after its Federal Reserve cut interest rates by 0.75%.Asian markets have continued a rally started in the US after its Federal Reserve cut interest rates by 0.75%.
In Japan, the Nikkei index jumped more than 3%, while shares in Australia, Taiwan and South Korea rose by 2%. In Japan the Nikkei jumped 2.5%, while shares in Australia rose 4%, and those in India and South Korea by 2%.
On Wall Street on Tuesday, the Dow Jones stock index recovered from recent losses and registered its biggest one-day gain for more than five years.On Wall Street on Tuesday, the Dow Jones stock index recovered from recent losses and registered its biggest one-day gain for more than five years.
Although the credit crunch may not be over, investors have been reassured the Fed is in control, correspondents say. The Fed's action was aimed at averting panic after the cut-price takeover of troubled investment bank Bear Stearns.
The US central bank's action was aimed at averting a financial panic after investment bank Bear Stearns was forced into a fire sale to avoid collapse. It was forced into a fire sale to rival JP Morgan Chase for a fraction of its value, in order to avoid collapse.
Bear Stearns has been one of the highest-profile victims of the subprime mortgage crisis, and subsequent global credit crunch.
US Treasury Secretary Henry Paulson admitted on Tuesday that the US economy was currently facing a "sharp decline", but hoped for a recovery later in the year.US Treasury Secretary Henry Paulson admitted on Tuesday that the US economy was currently facing a "sharp decline", but hoped for a recovery later in the year.
The Fed has now lowered rates six times since mid-September, with the economy reeling from a credit crisis triggered by a slump in the US housing market.The Fed has now lowered rates six times since mid-September, with the economy reeling from a credit crisis triggered by a slump in the US housing market.
Losses recoupedLosses recouped
Japan's benchmark Nikkei index fell to a 31-month low on Monday.Japan's benchmark Nikkei index fell to a 31-month low on Monday.
The Federal Reserve has stepped in to try and stave off recessionThe Federal Reserve has stepped in to try and stave off recession
But by the end of morning trading on Wednesday, a substantial amount of those losses had been recouped, says the BBC's Chris Hogg in Tokyo.But by the end of morning trading on Wednesday, a substantial amount of those losses had been recouped, says the BBC's Chris Hogg in Tokyo.
Japanese banks, whose share prices were damaged by the credit crunch, performed well in early trading.Japanese banks, whose share prices were damaged by the credit crunch, performed well in early trading.
The nerves of Japanese bank sector investors were soothed by better than expected results from two big US institutions on Tuesday.The nerves of Japanese bank sector investors were soothed by better than expected results from two big US institutions on Tuesday.
Goldman Sachs and Lehman Brothers, reported smaller falls in profits than analysts had been expecting.Goldman Sachs and Lehman Brothers, reported smaller falls in profits than analysts had been expecting.
But analysts are warning of more volatility ahead, our correspondent says.But analysts are warning of more volatility ahead, our correspondent says.