Asian markets soared Thursday, with Japan closing 10 percent higher and South Korea gaining a whopping 12 percent on international efforts to provide liquidity to emerging markets and global prospects of lower borrowing costs.
Commodity prices jumped and the yen weakened in the wake of the Federal Reserve's cut in rates to the lowest since June 2004, to soften the blow of a potentially deep recession. China, Hong Kong, Norway and Taiwan all delivered cuts of their own, and pressure mounted on the Bank of Japan to reduce rates after it meets on Friday.
The avalanche of government measures taken to increase bank liquidity, including $120 billion of currency swap lines opened between the Fed and four developing economies, and global rate cuts have prompted investors to make room in their cash-heavy portfolios for riskier assets. Credit availability and risk taking are essential to the functioning of the financial system.
The yen weakened on the combination of increasing risk appetite as well as expectations of the first rate cut by the Bank of Japan since the financial crisis broke out more than a year ago. The euro jumped 2.9 percent against the yen to 129.86 yen. The euro hit a 6-1/2-year low below 114 yen last Friday. The U.S. dollar rose 1.6 percent to 99.00 yen, staying well above a 13-year trough of 90.87 yen hit on trading platform EBS late last week. Crude oil futures climbed towards $70 a barrel in the Asian session.