Asian markets rise together while US markets fail to respond

Unlimited Quantitative Easing Falls Flat
Dow, S&P, and Nasdaq All Decline
KOSPI Rises Over 6% Intraday

[Asia Economy New York=Correspondents Baek Jong-min and Lee Min-ji] While the U.S. stock market fell following the Federal Reserve's (Fed) 'unlimited quantitative easing (QE)' move, Asian stock markets all rose. The U.S.'s ultra-strong measures to prevent an economic recession caused by the spread of the novel coronavirus disease (COVID-19), combined with expectations that the Korean government will announce financial market stabilization measures at the 2nd Emergency Economic Meeting, led the KOSPI to post gains in the 6% range.

[Image source=Yonhap News]

According to the Korea Exchange on the 24th, the KOSPI surged 6.58% (97.50 points) to 1,579.96 as of 11:50 a.m., compared to the previous day. The KOSDAQ index rose 5.95% (26.42 points) to 470.418. In both the securities and KOSDAQ markets, futures prices rose more than 5% for over a minute, triggering the buy-side circuit breaker that suspends program sell orders for five minutes.

The Fed's declaration of unlimited quantitative easing appears to have raised expectations for market stabilization measures. Moreover, speculation that strong financial market stabilization measures could be announced at the emergency economic meeting chaired by President Moon Jae-in also supported the rise in stock indices.

Seo Sang-young, a researcher at Kiwoom Securities, said, "The Fed's announcement of unlimited quantitative easing, which has increased the possibility of a sharp rise in the won-dollar exchange rate and credit risk mitigation, is positive for the domestic stock market," adding, "Attention should also be paid to the rebound in international oil prices and the rise in the Philadelphia Semiconductor Index."

Japan's Nikkei 225 index was trading at 18,055.87, up 6.92% (1,168.09 points) compared to the previous trading day as of 11 a.m. China’s Shanghai Composite Index was also up 1.77% at 2,707.35 as of 10:46 a.m. (Korean time).

Earlier, the U.S. stock market closed lower. On the 23rd (local time), the Dow Jones Industrial Average closed at 18,591.93, down 3.04% from the previous day, and the S&P 500 index closed at 2,237.40 points, down 2.93%. The Nasdaq index, buoyed by strong performances from Amazon and others, limited its losses to within 1% (down 0.27% to 6,860.67 points).

Before the U.S. market opened, the Fed expressed a strong commitment to economic stimulus in a statement. The Fed stated, "We will use the full range of tools to support the U.S. economy during this difficult time," and announced its plan to purchase Treasury securities and mortgage-backed securities (MBS) "in the amounts needed." This shows a strong determination to conduct unlimited quantitative easing (QE), not limited to the previously announced $700 billion purchase of Treasury securities and MBS a week ago. In particular, as concerns over credit crunch due to corporate bond market instability grew, the Fed decided to purchase corporate bonds, which it did not buy even during the 2008 global financial crisis. The plan also includes purchasing student loans, auto loans, credit card loans, and Small Business Administration (SBA) guaranteed loans, as well as expanding the scope of municipal bond purchases.

This content was produced with the assistance of AI translation services.