European stocks have extended their losses amid concerns the US Federal Reserve’s massive interest rate cut won’t go far enough to ease economic torment. It follows Tuesday’s decision by the Fed to slash interest rates by 0.75 percentage points – its biggest cut in 25 years.
Despite a late rise in stock prices yesterday and a positive session in Asia today, investors are still cautious. Japan’s benchmark stock index rose sharply following the emergency interest rate cut.
Bank of Japan’s governor Toshihiko Fukui said he believed the US decision was the right one: “The United States has taken an appropriate and timely approach towards their risk of economic slowdown and the growing downside risk. I believe it was a very good decision,” he said.
The Fed’s rate cut gave Wall Street a partial rebound from a precipitous early decline. After bouncing around throughout the session, the Dow Jones closed with a milder drop of 1.06 per cent.