Stock Markets Rally After US Central Bank Intervenes
PRESS ASSOCIATION -- Global stock markets are rallying after moves by the US central bank to give a boost to its struggling economy.
The Federal Reserve's announcement that interest rates would be kept at record lows until at least mid-2013 prompted a last-minute rally on Wall Street and led Asian stocks higher in early trading.
It follows a rally on Tuesday when London's battered share index dodged its longest losing streak for eight years because of hopes that the Fed would announce a third round of money printing, or quantitative easing (QE).
A third round of QE did not materialise - instead the Fed warned that growth had been slower than predicted said it expects the economy to be weak for two more years. But the Fed did leave the door open to more fiscal stimulus saying that it has discussed "the range of policy tools" it can use to spur the ailing US economy.
In the wake of the Fed's announcement, stocks on Wall Street initially fell, but a rapid rally in the last hour of trading in New York saw the Dow Jones close up 4%, the S&P 500 4.7.
Stocks in Japan, Australia and New Zealand were all higher in early trading.
Tuesday's rise in London meant the market avoided its eighth consecutive day of falls, which would have been its worst run since January 2003. The FTSE 100 Index has tumbled some 10% in the past two weeks amid panic that the eurozone will be crushed under the weight of its debts and the US will lead the world back into recession.
Eurozone leaders intervened in bond markets to shore up the finances of debt-ridden Italy and Spain earlier this week.
Traders are terrified that the stock market falls could help push the global economy into recession by destroying consumer confidence, prompting traders to dump more stocks and creating a vicious circle.
Despite Tuesday's improvement, the FTSE 100 Index has lost around 900 points in a month and on Tuesday posted four consecutive sessions of triple-digit losses for the first time in its 27-year history.