Asian markets fear Federal Reserve’s move
Ripples of US’s growth forecast is felt in Asia. The stock markets in Asia fell Thursday as investors registered dismay at initiative taken by the Federal Reserve to try to invigorate the stalled US recovery.
After a prolong debate on Wednesday, the Federal Reserve said it was extending a program called Operation Twist, under which the Fed swaps short-term bonds for longer-term ones to help keep long-term interest rates low.
Against traditional practice of new bond purchases, US chose to swap the bonds from short term to long term. This has not been welcomed well by the investors. It is unlikely that investors who are not borrowing now are likely to change their minds just because rates dropped.
The move is resulting negative impact on businesses. Most Asian share markets registered loss. Though, Japan’s Nikkei 225 index rose 1 per cent, Hong Kong’s Hang Seng lost 0.6 per cent and South Korea’s Kospi lost 0.7 percent. Australia’s S&P/ASX 200 fell 0.6 per cent. Even the US markets fell slightly after the announcement.
The Dow Jones industrial average fell 0.1 per cent and Standard & Poor’s 500 index fell 0.2 per cent.
Oil prices have gone down, worldwide by 2 per cent in average.