Anticipation for additional economic stimulus by the US Federal Reserve resulted to an increase in Asian markets at the start of trading on Wednesday. A similar move was also anticipated to be implemented in Europe, which also contributed to the increase in the markets in Asia.
Hopes that the policy meeting of the Federal Reserve will result to additional stimulus for the US economy have increased recently. The two-day meeting is set to end on Wednesday.
Among the options that Fed officials can use us the extension of the program where short-term Treasury bills will be cold by the central back and the proceeds will be used for long-term securities. This program was dubbed as Operation Twist. Another option that is available for the Feds is the introduction of another set of quantitative easing.
In the G-20 summit in Mexico, leaders in Europe pledged to start the integration of their banking system as it hopes to ease apprehensions on the debt crisis in the region. It will be easier for the US since a decision of the Fed is normally implemented immediately while a decision made in Europe will have to be ratified by the members-countries of the region.
Concerns on the capability of Spain to borrow still lingers even as concerns have emerged on the possibility that the $126 billion worth of bailout may be insufficient to strengthen the financial system after an audit is completed on the banks of the country.
Tuesday saw the euro increasing against the dollar by 0.9 percent to around $1.27 before it slightly declined to around $1.2665 in Asia.
The reports resulted to an increase in the Nikkei average in Japan by 0.8 percent while the S&P ASX200 (INDEXASX:XJO) of Australia increased by 0.7 percent. The Kospi of Korea also increased by around 0.4 percent. Despite the initial gains, analysts have indicated that caution will be practice until a decision is made by the Fed.
The Dow Jones (INDEXDJX:.DJI) and the FTSE increased by 0.8 percent and1.7 percent respectively in Tuesday.