Asian trade: Asian markets are posting modest gains, following the positive close down on Wall Street. However, U.S. futures lost a few points during the Asian session, the S&P futures fell 0.50%.
The market was pulled higher today by the FOMC decision to buy as much as $1 trillion in bonds, trying to kick-start the economy by dropping the borrowing costs. The move was unexpected by market participants, something that leveraged its short-term effects over the global financial markets.
Among other things, the dollar plunged, U.S. equity markets found the strength to reverse the early declines, and add 2.1% by the end of the day. Treasuries, which are directly affected by the Fed’s decision, fell the most since 1987 as the Fed pledged to buy $300 billion worth of Treasuries, and another $750 billion in mortgage securities over the next few months. The Bank of Japan and the Bank of England pledge for a similar approach over the last few weeks.
The positive news surrounding the Fed helped the U.S. markets cut down this year losses to 13%, while it helped the financials jump the most in a month. The XLF index gained 10% yesterday, while it rose nearly 50% over the last few days as investors became optimistic on the bank’s valuation. In Japan, the report helped the Nikkei extend a five-day rally, making the 6.1% rally seen this week the best performance of 2009.
Tonight, the Nikkei gained 13.51 points (0.17%) to 7,985.68. The Australian S&P/Asx added 23.10 points (0.67%) to 3,469.40.
Crude oil rose as the economy is forecast to pick up after the Fed’s actions. Crude oil for April delivery rose $1.20 to $49.30.
Gold rose as traders are looking for ways to hedge against inflation. Bullion for immediate delivery gained $43.80 to $932.90.