Fed rate cut expectation firing global stock markets (29-01-2008)

It seems the financial world is expecting a further rate cut by the Fed - analysts give it an 88 percent chance of this happening tomorrow. As a result global markets have been disregarding global and local problems and are looking forward to this as a solution to boost the economy. The Dow Jones made a triple digit gain last night as investors interpreted the weak home sales figures as an indication that the Fed will lower rates this week.

Asian markets advanced for the same reason, although in Japan it seems that the economy is already in recession. During the trading day, markets here advanced on financials as well as shipping companies with Mitsubishi UFJ Financial Group up 4.6 percent at 1,030 yen and Mizuho Financial Group up 2.9 percent at 503,000 yen, while shipper Nippon Yusen shares jumped 8.1 percent to 825 yen. Hong Kong markets also gained on financials, while Australian markets reacted to the previous day’s losses having missed a trading day due to the Australia Day celebrations.

European markets were higher in opening trade, after the overnight advance in U.S. markets and Asia, as investors are betting a further cut in US interest rates. Financials were among leaders here too, with Societe Gιnιrale, Swiss Re and Prudential, among others, posting gains.

Source: ISFM