This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.bbc.co.uk/news/business-25442514
The article has changed 11 times. There is an RSS feed of changes available.
Version 2 | Version 3 |
---|---|
Asian stock markets rise on Federal Reserve move | Asian stock markets rise on Federal Reserve move |
(about 2 hours later) | |
Asian stock markets have risen after the US Federal Reserve's commitment to keep interest rates low cushioned the impact of its decision to scale back its stimulus programme. | Asian stock markets have risen after the US Federal Reserve's commitment to keep interest rates low cushioned the impact of its decision to scale back its stimulus programme. |
Japan's Nikkei 225 index rose 1.6% and Australia's ASX 200 added 2%. | |
The US central bank said it planned to scale back its $85bn (£51.8bn) a month bond-buying programme by $10bn a month. | The US central bank said it planned to scale back its $85bn (£51.8bn) a month bond-buying programme by $10bn a month. |
Analysts said the taper was less than markets had expected, which helped boost investor morale. | Analysts said the taper was less than markets had expected, which helped boost investor morale. |
Scott Clemons, chief investment strategist for Brown Brothers Harriman Wealth Management, said the move indicated the central bank was in no rush to remove the stimulus. | Scott Clemons, chief investment strategist for Brown Brothers Harriman Wealth Management, said the move indicated the central bank was in no rush to remove the stimulus. |
"The Fed is using a very careful language that they are going to continue to support the economy," he said. "That's part of the reason why the stock market is rallying." | "The Fed is using a very careful language that they are going to continue to support the economy," he said. "That's part of the reason why the stock market is rallying." |
Stock indexes in South Korea, Indonesia and the Philippines also rose. | |
This followed overnight gains in the US markets. The Dow Jones surged to close up 292.71 points, or 1.84%. Both the Nasdaq and S&P 500 indexes were up over 1% as well. | This followed overnight gains in the US markets. The Dow Jones surged to close up 292.71 points, or 1.84%. Both the Nasdaq and S&P 500 indexes were up over 1% as well. |
'Economy is healing' | 'Economy is healing' |
The programme, called quantitative easing, was introduced by the US central bank after the global financial crisis. | The programme, called quantitative easing, was introduced by the US central bank after the global financial crisis. |
The main objective was to increase the money supply and improve liquidity in the financial system in the hope of sparking economic growth and supporting employment. | The main objective was to increase the money supply and improve liquidity in the financial system in the hope of sparking economic growth and supporting employment. |
The Fed's governing committee cited stronger job growth as a reason for the decision to begin winding down the programme. | The Fed's governing committee cited stronger job growth as a reason for the decision to begin winding down the programme. |
It forecast the unemployment rate would fall to 6.3% in 2014 from its current level of 7%. | It forecast the unemployment rate would fall to 6.3% in 2014 from its current level of 7%. |
Analysts said the Fed's decision to scale back the programme also indicated that it was confident of a sustained recovery in the US economy. | Analysts said the Fed's decision to scale back the programme also indicated that it was confident of a sustained recovery in the US economy. |
"It is fodder for possibly better markets because it affirms the economy is healing," said Erik Davidson, deputy chief investment officer at Wells Fargo Private Bank. | "It is fodder for possibly better markets because it affirms the economy is healing," said Erik Davidson, deputy chief investment officer at Wells Fargo Private Bank. |
Data released last month showed that the US economy grew at an annual pace of 2.8% in the third quarter of the year. | Data released last month showed that the US economy grew at an annual pace of 2.8% in the third quarter of the year. |
The growth rate was faster than expected, and was an improvement on the 2.5% pace seen in the previous quarter. | The growth rate was faster than expected, and was an improvement on the 2.5% pace seen in the previous quarter. |
A pick up in the US economy - the world's largest - is likely to provide a boost to many Asian economies which rely heavily on exports to the US for their growth. | A pick up in the US economy - the world's largest - is likely to provide a boost to many Asian economies which rely heavily on exports to the US for their growth. |
Currency moves | Currency moves |
The Fed's decision also saw the US dollar strengthen against major Asian currencies. | The Fed's decision also saw the US dollar strengthen against major Asian currencies. |
It jumped as much as 1.3% to a five-year high against the Japanese yen. It was trading as high as 104.36 yen to a US dollar. | It jumped as much as 1.3% to a five-year high against the Japanese yen. It was trading as high as 104.36 yen to a US dollar. |
The yen's decline also helped boost Japanese stocks, as a weak currency makes Japanese goods more affordable to foreign buyers. | The yen's decline also helped boost Japanese stocks, as a weak currency makes Japanese goods more affordable to foreign buyers. |
The US dollar also strengthened against the Australian and New Zealand dollars, the Indian rupee. | The US dollar also strengthened against the Australian and New Zealand dollars, the Indian rupee. |
Nick Verdi, an analyst with Barclays Capital, said that a move away from very loose monetary policy made "the US dollar a more attractive investment option". | Nick Verdi, an analyst with Barclays Capital, said that a move away from very loose monetary policy made "the US dollar a more attractive investment option". |
"Even though the Fed has committed to keeping interest t=rates low for now, at some point they will have to start to rise and investors are betting on that." | "Even though the Fed has committed to keeping interest t=rates low for now, at some point they will have to start to rise and investors are betting on that." |