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Asian markets tumble as Fed tapers QE3 again

Asian markets tumble as Fed tapers QE3 again
Asian markets led by Japan dived in trade today as the US Federal Reserve further eased its asset purchase programme, more popularly known as QE3 by $10 billion.

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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