Market Buzz: US Fed announcement boosts global indices

Traders work on the floor of the New York Stock Exchange during afternoon trading.(AFP Photo / Mario Tama)
Global markets made significant gains after the US Federal Reserve announced its QE3 mortgage bond-buying program Thursday, along with promises to continue stimulus measures until the economy and jobs market show signs of sustained growth.

The Fed announced Thursday that it will continue aggressively purchasing $40 billion a month in mortgage-backed securities until unemployment decreases. Fed Chair Ben Bernanke said he hoped the measure would lead to a “sustained improvement” in the economy and continued job creation.

We may see a correction on the Russian markets after Friday’s rally, but we can again expect a strong gain in the miners after commodity prices rose,” Ilya Rachenkov from Investcafe said. The Russia’s rouble-denominated Micex hit a five-month high Friday after the Fed made its announcement, jumping 4.2%. The dollar-denominated RTS index skyrocketed 7%.

Asian markets traded lower on Monday amid a slump in Chinese indices. Exports in South Korea declined amid a stronger won. Hong Kong’s Hang Seng Index slipped 0.1%, China’s Shanghai Composite lost 1.3% and South Korea’s Kospi fell 0.4%. Japanese markets were closed for a holiday on Monday.

European stocks and the euro surged on Friday, boosted by the Fed’s stimulus plans. The FTSE 100 hit its highest level in six months on Friday, gaining 1.6% and nearly surpassing the psychologically important 6,000 mark. The DAX Index added 1.4% at the close of trading, its highest level since July 2011. The CAC 40 rallied 2.27%.

US stocks also made gains on Friday in the wake of the Fed’s announcement, which could spark an uptick in equities in the coming months. The Dow Jones gained 0.4%, the S&P 500 climbed 0.4% and the Nasdaq added 0.89%.