Posted September. 20, 2007 07:51,
Stock markets in Asia, Europe, and the U.S. posted gains on the expectations that yesterdays Federal Reserve Bank rate cut will revitalize the U.S. and other economies, which have been slowing down recently due to the subprime crisis in the U.S.
The Federal Open Market Committee (FOMC) of the Fed convened a regular meeting on September 18 and decided to cut the Fed funds rate by 0.50 percentage points from 5.25 to 4.75 percent. It also agreed to lower the discount rate by 0.50 percentage points to 5.25 percent.
It was the first rate cut by the Fed in more than four years since the 0.25 percentage point cut from 1.25 to 1.0 percent on June 25, 2003. Experts say that the move is targeted at preventing a subprime crisis-driven financial market crunch and economic slowdown.
After the Fed announced the steeper-than-expected rate cut, the Dow Industrial Average rose more than 300 points. The index closed at 13,739.39 that day, up 335.97 points (2.51 percent) from the previous day, posting the largest gain in five years.
The Nasdaq index gained 70.00 points (2.71 percent) to reach 2,651.66, while the S&P 500 grew 43.13 points (2.92 percent) to a record 1,519.78.
The Kospi index closed at 1,902.65, up 64.04 points (3.48 percent) from the previous day. The index exceeded the 1,900 mark for the first time in more than a month after it reached 1,908.68 on August 9. The Kosdaq index reached 784.67 at the closing bell, up 9.22 points (1.19 percent).
Stock markets across Asia posted universal gains, with the exception of China. The Nikkei average stock price closed at 16,381.54 yen on a 579.74-yen surge (3.67 percent) from a day earlier, posting this years highest gain.
While the stock indexes in Taiwan and Hong Kong all rose, the Shanghai Stock Exchange Composite Index dropped by 29.94 points (0.55 percent) to close at 5,395.27. Major stock markets in Europe also gained one to two percent on September 18 and maintained the upward momentum the following day.