After two days of bear run in the stock markets worldwide, Wednesday saw stock markets in Asia recoup a part of their losses. The positive investor response was a direct result of the cut in Fed rate by three and a quarter basis points and the better than expected earnings from major US investment banks Goldman Sachs and Lehman Brothers.

In Wednesday’s trade, Nikkei 225 index rose by 2 percent, Hang Seng recorded a 2.7 percent rise and Australia’s main market index rose by 3.6 percent points. The South Korean, Chinese and the Indian market indices showed similar upsurge. Dow Jones industrial average rose by 420 points on Tuesday, its biggest single day gain in more than five years. According to market analyst David Cohen, with uncertainty continuing for the global and US economies the roller coaster ride will continue. Wednesday’s stock performance has lifted the market to the position it held at the beginning of the week before the “Black Monday” that witnessed a strong bearish run. There is also good news for the US dollar. It rose against several major Asian currencies. Despite of a gain of 1.09 percent points by the main 30-share BSE index the trend in the broader Indian market was negative with 1,922 losers outpacing 755 gainers on volume of 309 million shares. With the foreign institutional investors being largely net sellers in the Indian equity market in the current circumstances, analysts hope that the US rate cut will help inflow of foreign funds in the markets of the emerging economies.

However, with expectations of the US markets opening lower on Wednesday as investors prepare to take home the profit they gained from Tuesday’s upbeat performance there is a possible danger of the global markets facing another down trend later this week.

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Via:Yahoo