Asian stocks clawed back some lost ground on Wednesday, following a rebound in US shares, after the Federal Reserve made an unprecedented pledge to keep interest rates near zero for at least two years, stemming a global equity rout for the time being.
Financial bookmakers expected Europe’s main indexes, which finished the last session in positive territory, to open up 0.4-0.8 percent, but S&P 500 futures <SPc1> fell 0.4 percent, suggesting at least a pause in Wall Street’s sharp rally.
“It’s possible the bottom has been met but it is too early to say so,” said Albert Hung, chief investment officer at Sydney-based Alleron Investment Management.
“Normally when you see this sort of movement you need another two weeks to be sure the bottom has been found.”
Investors remained wary about the implication of the Fed’s move — that it expects the US economy to remain weak far longer than previously forecast — and this supported demand for safe havens such as gold and the Swiss franc.
“Volatility is calming down from an extreme level. Clearly there’s going to be considerable concerns still, but the market had gotten seriously carried away and gone to an extreme of fear,” said Greg Gibbs, strategist at RBS in Sydney.
World stock markets had been tumbling since the start of August on fears of a slide back into recession for the United States, reinforced by a downgrade of the US credit rating on Friday, and the ever-expanding euro zone debt crisis.
MSCI’s all-country world stock index remained about 16 percent below its May peak on Wednesday, after slipping as far as 20 percent, the generally accepted definition of a bear market, on Tuesday.
Tokyo’s Nikkei rose 1.3 percent and MSCI’s broadest index of Asia Pacific shares outside Japan gained about 3.1 percent , led by the materials sector, which jumped more than 3.5 percent . The benchmark has fallen around 12 percent in August. Wall Street shares posted their biggest one-day gain in more than two years on Tuesday, when the S&P 500 index leapt 4.7 percent.
“I doubt share prices will keep rising from current levels as central banks’ policies are not helping to lift the real economy, they are simply pumping liquidity by purchasing bonds and keeping rates low,” said Jun Fukashiro, chief fund manager at Toyota Asset management.
Australia’s resource-heavy index gained 2.7 percent .
Commodities such as oil and industrial metals, whose demand is related to economic growth, and commodity-linked currencies such as the Australian dollar rose.