There must have been some relief in markets on Tuesday that there was no follow-through selling after the plunge on Monday. From Bloomberg:
U.S. stocks rallied, rebounding from the market’s worst tumble since October, after General Electric Co. announced plans to maintain its dividend and the Federal Reserve extended terms of three emergency loan programs...
The S&P 500 added 32.6 points, or 4 percent, to 848.81. The Dow Jones Industrial Average surged 270 points, or 3.3 percent, to 8,419.09, with 28 of its 30 companies rising. The Nasdaq Composite Index climbed 3.7 percent to 1,449.8. Seven stocks increased for each that fell on the New York Stock Exchange...
Europe’s Dow Jones Stoxx 600 Index advanced 1.7 percent, reversing an earlier drop of 2.3 percent. The MSCI Asia Pacific Index decreased 4.5 percent as China Petroleum & Chemical Corp. dropped 5.6 percent.
Still, central banks are taking no chances. The Reserve Bank of Australia kicked off Tuesday's policy actions by slashing rates again. AFP/CNA reports:
Australia's central bank slashed interest rates by 100 basis points Tuesday in the latest in a series of aggressive cuts sparked by the global financial crisis.
The bigger-than-expected cut by the Reserve Bank of Australia (RBA) dropped the official cash rate to 4.25 per cent, the lowest in more than six years, as the bank predicted that inflation could soon begin to fall.
There were no rate cuts from the Bank of Japan's emergency meeting but officials there were not exactly complacent. From Bloomberg:
The central bank will begin accepting BBB or higher-rated corporate debt on Dec. 9 and will start a new lending facility for commercial banks in January, it said in a statement after an emergency meeting today in Tokyo. The policy board kept its overnight lending rate at 0.3 percent...
The steps are aimed at encouraging banks to purchase and underwrite a wider range of corporate debt that they would then use as collateral for borrowing from the central bank. Lending to banks will increase by about 3 trillion yen ($32 billion) once both measures take effect, [Governor Masaaki] Shirakawa told reporters today.
Meanwhile, the Federal Reserve is extending its war against the credit crunch. From Bloomberg:
The Federal Reserve extended the term of three emergency-loan programs to April 30 from January 30, aligning their expiration dates with other central bank efforts to mitigate the credit crisis.
The Primary Dealer Credit Facility and Term Securities Lending Facility, created in March, and the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, begun in September, were lengthened “in light of continuing strains in financial markets,” the Fed said today in a statement in Washington.