Tuesday saw huge gains for the Dow Jones industrial average, with 416.66 point gain–the largest in nearly five years. This came after the Federal Reserve released $200billion in “liquidity,” in an effective buyout, to raise hopes on the market.
The Asian markets followed, but the Shanhai Composite Index declined, on supposed concerns that China’s $1.5 trillion worth of U.S. Treasuries may see substantial price declines as a result of the buyout.
“Markets actually rallied less than expected, given the U.S. was up 400 points. Hong Kong should be stronger,” says Richard Lee, an analyst for Core Pacific Yamaichi in Hong Kong.
The Chinese markets are not the only nay-sayers, however.
“It wouldn’t surprise me today to see a 200-point drop, and another 200-point drop by the end of the week,” says Andrew Clarke, a trader for Societe Generale in Hong Kong. “The news yesterday was not meant to make a rally, but rather an organized stampede for the door.”
So much for the happy spirits.
Read the rest of The Street’s analysis here.
