Global markets react to Fed cut

Asian stocks bounced back while European securities still slumped following the Fed’s O.75% interest rate cut on Tuesday. Fears remain as many still anticipate a U.S. recession, according to published reports. As the Asian markets closed before the Fed’s rate cut announcement, The Hang Seng index of Hong Kong had fallen 8.65%, a total loss of 14% over two days, while the Shanghai composite index fell 7.2%. During the following day’s trading on Wednesday, both indexes bounced back, the Hang Seng enjoyed a 10.6% increase, the largest since September of 1998, while the Shanghai composite rose 4.65%. The Japanese Nikkei average was up 2% by day’s end, while the Indian Sensex index was up 5.6% today. Major European indexes were down at mid-day on Wednesday, the CAC 40 of France down 4%, the FTSE 100 of London fell 2%. The DAX 30 of Frankfurt was down 3.2%. The Fed’s emergency rate cut to 3.5% was the largest action taken by the Fed since the terrorist attacks of September 11, 2001. The Hong Kong Monetary Authority cut it’s overnight lending rate to 5%, from 5.75% early on Wednesday. The European Central Bank President Jean-Claude Trichet held a press conference on Wednesday, but did not address the rate cut, according to Reuters. The roller-coaster ride in prices over the past few days reaffirmed the fears that a recession, or even the panic over the prospect of a recession in the United States would have a deep impact on worldwide markets.