For a change, traders across markets chose to pick the good news on Tuesday, no matter how flaky they may turn out to be later. They banked on Greece's pledge to cut down its bloated public sector, Spain's ability to stay afloat, and speculation about Fed coming out with new measures on Wednesday. Cutting down bearish bets ahead of the Fed meeting, they chose to ignore Italy's downgrade by S&P, dip in US housing numbers, and a lower global growth forecast by the IMF. Select Asian stock markets rose, with India being the biggest gainer, while there was a stock rally in Europe after Greece temporarily averted a default by repaying bond interest. The Dow too opened higher. It's widely perceived that the US Federal Reserve may carry out "Operation Twist" to soften long-term interest rates - a move that could lower loan defaults from home buyers and stabilise the mortgage market.
Source : The Economic Times
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