MercoPress. South Atlantic News Agency

US, EU and Asian markets rebound strongly on Fed Reserve announcement

After ‘black Monday’ a glorious Tuesday, all in 24 hours

Asian markets rebounded after the US Federal Reserve said it will keep interest rates on hold and Wall Street had its best day in two years. The decision by the US central bank to keep rates at current levels until at least 2013 helped stem one of the biggest sell-offs in recent years.

Japan's Nikkei 225 index and South Korea's Kospi rose 1% while Hong Kong's Hang Seng gained 3.2%. However, analysts say markets will remain choppy amid global growth fears.

They said that many investors were still concerned about global growth and the fact that the Fed did not announce any new measures to boost expansion, such as an economic stimulus package.

One of the key reasons behind the massive sell-off over the past few days has been the fear that the US, the world's biggest economy may be falling into recession.

The fears about the state of the global economy were fanned last week by Standard & Poor's decision to cut the US's credit rating from triple A to AA+ for the first time.

On top of this, the ongoing debt issues in Europe have prompted many analysts to revisit their own estimates for both economic and corporate profit growth.

Despite the concerns, early trading on Wednesday provided markets with a respite from the recent selling spree. Australia's ASX index added 113.6 points to 4,148.4, after erasing loses of almost 6% on Tuesday. New Zealand's main NZX 50 index added 3.5% to 3,206.2.

Shanghai's Composite Index opened 1.4% at 2,562.4. In Hong Kong, the Hang Seng jumped 3.7% to 20,045.

The gains came after markets in Europe and the US gained on Tuesday.

The Dow Jones industrial average gained 429.92 points, or 3.98%, to end at 11,239.77. The Standard & Poor's 500 Index rose 53.07 points, or 4.74%, to 1,172.53. The Nasdaq Composite Index added 124.83 points, or 5.29%, to 2,482.52.

European shares ended broadly higher, halting a 20% dive over 2-1/2 weeks as traders started rummaging around for bargains, with hopes the US Federal Reserve will hint at a plan to revive its economy.

The pan-European FTSEurofirst 300 index of top shares closed up 1.2% at 947.90 points, with volume more than double its 90-day daily average after sinking by as much as 5% and hitting a two-year low earlier in the session.

The UK's FTSE 100 index ended up 1.9%, while France's Cac added 1.6%.