Asian markets gained hoping that US Federal Reserve could delay the reduction in economic stimulus next month. The US home sales were lower and market experts feel that US Fed could delay the rollback in fiscal stimulus.
As the hot money flows out of emerging markets, the investors are looking to exit stocks which are trading at higher P/E ratio. Markets in India, Turkey and Brazil witnessed sharp correction after US Federal Reserve indicated possibility of reduction in economic stimulus. After the news, India and Brazil also witnessed decline in their currencies compared to US dollar.
Hong Kong's Hang Seng index was higher by 0.7 percent in today's trade, marking end to the recent downtrend in the market. Shanghai Composite Index was also higher by 1.9 percent. Taiwan's Taiex Index was higher by 0.3 percent. Indian market also jumped today after decent gains posted on Friday.
Federal Reserve is considering rate hike, but wants the inflation to reach 2.5 percent. Also, the goal for unemployment is 6.5 percent. The decline in home sales in July could also impact the decision of Federal Reserve to tighten money in US markets. Fed officials remained divided on the timing on the scaling back of economic stimulus. The economy has just started picking up pace in United States. Reduction in stimulus could impact growth.
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