Asian markets tumble as Fed tapers QE3 again
This means that the US Federal Reserve would now buy bonds to the tune of $65 billion only. QE3 or asset purchase programme, helps to pump more liquidity into the US economy and a lot of this liquidity finds its way into emerging market stocks, gold and other asset classes.
A reduction in the programme reduces liquidity and pushes asset prices, including stocks and gold lower. In December, the US Fed had announced a similar reduction of $10 billion in its asset purchase programme. Read more about QE3 here
The Japanese Nikkei saw a huge cut of 511 points or a staggering 3.31 per cent, while the Hang Sang was down 1.5 per cent in trade and the Singapore's Strait Times down 1 per cent in trade as a results of the US Fed's decision.
Today's fall in the Asian markets was also on account of the fact that he final China HSBC purchasing manager's index (PMI) fell to a new six-month low of 49.5 in January.
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