Bargain hunters, and expectations central bank interest rates around the world would be slashed to stave off recession, propped up staggering sharemarkets, with wild upswings not seen in decades.
In New Zealand, the market's SE 50 index began strongly yesterday and overrode the previous day's losses to be up 4.4% at midday, but slid to close up at 2.18%, on turnover of $92 million.
In Tuesday trading, the New York-based Dow Jones Industrial Average had its second-largest point gain in history, swinging 13.3% to end the day up 10.9%.
Hong Kong's Hang Seng bourse swung a total 27% from negative to end the day up 14.34%.
The Nikkei booked its largest decline in 26 years 24 hours earlier.
ABN Amro Craigs broker Peter McIntyre said there had been rises across the board, with bargain hunters and investors expecting cash rate cuts moving back into markets.
"The markets have reached such an exhaustive point that commodities and equities have been mass-ively sold off, but people are now thinking oversold," Mr McIntyre said.
There were myriad reasons for the activity, including large hedge funds cashing in because of forced selling or covering earlier positions, which may have worked against them, in context with market volatility in the past three weeks.
An example of remarkable gains during the past two days is hard commodities on the London Metals Exchange (LME), which has seen industrial metal prices plummeting off record highs for several months because of building fears of recession and anticipated fall in demand.
However, with the US Federal Reserve central bank giving indications of pushing its interest rate towards 0%, metals could see a resurgence, Mr McIntyre said.
Overnight, LME prices saw lead, tin and nickel up an average 19% each, aluminium up 6.8% and copper 12%.
"Metals have come off a significant [price] unwinding of the past six months," he said.
Similarly, shares yesterday on the ASX reflected some strength in the resource sector. with giant BHP Billiton trading up 5.2% and takeover target Rio Tinto up 5.6%.
The Fed was expected to deliver a 0.5% cut to its interest rate, down to 1%, which was expected to flow through to Europe and ultimately the Asia-Pacific region, prompting more infrastructure spending to ease the effects of recession.
"The aggressive easing of interest rates would be expected to feed into all economies," he said.
The Fed would be less concerned about prompting inflation at present and instead spurring growth, but wanting to steer well clear of a deflationary environment where shrinking economies ultimately push prices down.
• Germany: Shares of Volkswagen AG jumped an eye-popping 82% yesterday after a similar surge the day before, prompting German financial regulators to investigate.
Speculation for the rise centred on a reduced number of shares available and on hedge funds needing to unwind bad bets on the share's direction.
The surge came amid reports big investors had been forced to buy scarce shares to get out of mistaken bets the shares would fall.
