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India On Media |
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| Money
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| US rate cut boosts global markets |
| Wall Street shares opened sharply higher on the news that the Federal Reserve was cutting the interest rate at which it lends money to banks
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| UNITED STATES OF AMERICA
, 17-August-2007
10:33:43 AM |
| After an hour, the Dow Jones had fallen back and was only up 1.10% at 12,986.7.
The news also boosted European markets. At 1530 BST the FTSE 100 was up 3.25%, Frankfurt's Dax was up 1.88% and the Cac 40 in Paris' was up 3.37%.
All three European indexes had been jumping between positive and negative territory throughout the day's trading.
The technology-based Nasdaq was up 1.1% at 2,478.1.
The Fed's rate cut is intended to help with the liquidity problems facing many banks following the US housing slump.
Europe's markets had been having a shaky day after big falls on Asian stock markets.
Japan's Nikkei fell 5.42%, its biggest points fall since April 2000, while Hong Kong's Hang Seng fell 1.38%.
It comes the day after London's FTSE 100 fell 4.1%, cutting almost £60bn off the value of Britain's top companies.
Central banks intervene
Other central banks had also been busy.
The Bank of Japan injected 1.2 trillion yen ($10.7 billion; £5.4bn) into money markets, which was its third intervention of the week.
Japanese investors are worried that a slowdown in the US economy will hit exports from Asia.
There is also speculation that the Bank of Japan could raise interest rates next week, despite the problems on the market.
Elsewhere, the Australian central bank intervened to support its currency for the first time for six years.
The Australian dollar was facing its biggest one day fall against the US dollar since it was allowed to trade freely in 1983.
US Recovery
On Thursday, Wall Street saw the Dow Jones claw back more than 300 points of its losses in the last hour of trading.
US shares were helped by rumours that Bear Stearns, which is heavily exposed to the mortgage sector, could get funding from a Chinese bank.
Also, there were suggestions that the government-sponsored lender Fannie Mae might be allowed to pump extra funds into the mortgage market.
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