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23 Jan, 2008 05:01

Stocks rally after U.S. rate cut

Russia's stock markets have got off to a stronger start, tracking a broad recovery across Asian markets. It follows a sharp cut in U.S. interest rates. On Tuesday, the benchmark RTS index regained much of its early declines, but still ended the day down.

Similarly, almost all stocks were lower on the dollar-denominated MICEX index.

Asian markets are rallying strongly after the U.S. Federal Reserve announced a substantial cut in interest rates to head off the threat of recession in the country’s economy.

After the Fed announcement, markets in Europe made up some losses and moved into positive territory.

Meanwhile, experts say the Fed Reserve should have taken these measures long ago but hesitated for fear of pushing up inflation.

After announcing the move, Treasury secretary Henry Paulson stressed that U.S. long-term economic fundamentals are healthy.

“The U.S. economy is resilient: unemployment remains low, and job creation continues at a modest pace… I have visited countries around the world and the more I see, the more I am sure that our workers are the most productive and innovative anywhere. But we need to do something now, because the short-term risks are clearly to the downside. The potential benefits of quick action to support our economy have become clear,” Paulson said.

Andrey Kortunov from the Eurasia Foundation spoke to RT about the market meltdown.

“The Russian economy is a special economy. First of all, it is not that integrated into the global economy and of course it depends primarily on the prices of gas and oil. So, it might be affected if the global demand for oil and gas goes down and prices go down as well,” he said.