The UK’s FTSE 100 index rose by the end of the day after massive downward trends earlier in the day, as markets all over the world rose slightly in the same trend. The FTSE 100 finished up by 1.9%, France’s Cac was up by 1.6%, and the Dow Jones in the US added 4%.
The Dow Jones had been down earlier as the Federal Reserve had not brought forward any ways to help the US economy. Investors had hoped that another round of Quantitative Easing (QE) would be announced but that was not the case.
The US economy, much like the UK one, will not see a rise in interest rates this year, and may not see it until 2013. Additionally, economic growth is slower than expected. This is not news to the UK, which has already announced similar experiences.
Those who work in investments fear that high debt levels could hurt these slow economies. The US credit rating was downgraded over the weekend and that combined with these fears led to markets decreasing on Monday.
China grew concerned and asked for global action in order to create market stabilization. The country’s Premier Wen Jiabao, asked for policies to reduce deficits and called for better communication and co-ordination.
The yields on Spanish and Italian government bonds, previously at extremely high rates, fell for the second day in a row, creating hope for the markets. This is in part due to the European Central Bank (ECB) intervening in the markets in order to keep costs down for both countries.
The head of the ECB, Jean-Claude Trichet said, “It is the worst crisis since World War II and it could have been the worst crisis since World War I if leaders hadn’t taken the important decisions.”
He also asked for governments to speed up processes of governments supporting bonds by purchasing them using the European Financial Stability Facility (EFSF). Spain has maintained that they do not need a bailout in the style of Greece.
Asian markets decreased on Tuesday, in contrast to the rises elsewhere, though the rises in the European and US markets were not large. The weak markets across the globe are still worrying for investors, especially considering the high levels of debt.