US rate cut gives Asia and Iseq a lift

In Asia, Hong Kong's Hang Seng and Japan's Nikkei 225 indexes are both more than 2% higher after a rally from the Dow of 3.5% - its biggest percentage one-day rise for more than five years.

The US Federal Reserve’s 0.75% interest rate cut last night – although smaller than the 1% hoped for by some City watchers – sent Wall Street’s Dow Jones Industrial Average soaring by more than 400 points.

The more upbeat sentiment after Monday’s turmoil fed into Asian markets and Dublin’s Iseq was 70.48 points higher at 5,968.59 in early trading.

Credit crunch fears over the cash crisis and cut-price sale at troubled investment bank Bear Stearns sent markets plunging at the beginning of the week.

The Fed has now cut its main interest rate by 2% in the first three months of this year – and 3% since the credit crunch first erupted in global markets last August – as it attempts to rescue the world’s biggest economy from the brink of recession.

But traders said the latest peak in the market turmoil could be short-lived as investors wait for a mild bounce-back from markets before heading to the exit.

Oliver Stevens, head of dealing at IG Markets, said: “It is unlikely that investors will see last night’s rate cut as the flame that scares away the bear - rather, market participants will have their ears close to the ground waiting for their next sell signal.”