Markets may keep climbing after US Fed's promise to keep interest rates low

Publie le mercredi 10 aout 2011

TORONTO - Broad-based gains on Asian stock markets today could usher in another day of advances on North American markets.

A U.S. Federal Reserve pledge this week to keep interest rates super low for the next two years is widely seen as helping to calm global markets.

The Toronto market surged 438.3 points to 12,109.26 Tuesday after a series of plunges brought the TSX to its lowest level in a year, reflecting fears of a U.S. recession and concern over Europe's debt crisis.

In New York, the Dow Jones industrial average gained 429 points after the Fed announcement and after plummeting 634.76 points the previous day in the wake of Standard and Poor's decision to cut the U.S. government's credit rating.

In Asia today, the Nikkei index in Tokyo rose 94.26 points, or just over one per cent, to 9038.74. Hong Kong's Hang Seng index jumped 452.97 points, or 2.34 per cent, to close at 19,783.67.

Indexes in Australia, Taiwan, the Philippines and mainland China were also higher while oil prices rose to nearly $82 a barrel.

Martin Lakos, director of Sydney-based stockbroker Macquarie Private Wealth, said the Fed announcement was key to restoring some stability to the markets.

"Clearly yesterday there were rumours, speculation — whatever you like — the Federal Reserve would in fact come out with a positive announcement and that's clearly what they've done," said Lakos.