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Asian markets rebound in knee-jerk reaction

Asian markets rebound in knee-jerk reaction
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Asian markets have rebounded after an overnight jump in Wall Street following the US Federal Reserve’s promise to keep interest rates near zero for two years.

Stocks clawed back some lost ground in Japan, South Korea and China.

However investors remain wary and more turbulence is expected. Although markets have responded positively to the news on interest rates, the underlying causes of all the problems remain.

The state of the US economy has not changed and is expected to stay weak. The credit rating downgrade, the debt ceiling fiasco, poor growth and the euro zone’s problems are still at large.

After near panic on Monday, the Federal Reserve’s move prompted Wall Street to bounce back with its biggest one-day gain in two years.

Analysts say the yo-yo scenario is fairly common as when markets get over-sold or over-bought, a knee-jerk reverse reaction can happen.