The US Federal Reserve has cut interest rates by a further 0.75% from 3% to 2.25% as it aims to counter the credit crunch and its knock on effect to the markets. The move comes after the news that Bear Stearns was in trouble and a swift takeover deal was put in place with JP Morgan Chase as suitor. Some commentators are suggesting that the US is already in recession and the interest rate cut should have been 1% rather than the 0.75% delivered.

However the US Markets have reacted positively to the news and the Dow is currently up over 300 points. The anticipated cut also gave renewed cheer to the FTSE which ended the day up over 190 points and reversed much of yesterdays losses.

Undoubtedly there is still more troubled times ahead and the markets are currently places for the brave investor, but let’s enjoy the good news while we can.

HSBC has written-down £8.7bn due to the size of its exposure to US markets and the decline in the US housing markets and hence the value of its loans. The credit crunch leaves HSBC cautious in its outlook for 2008 and believes the situation could get worse before it gets better.

 Despite the level of write-downs HSBC, the UK’s largest bank saw its profits rise by 10% to £12.2bn. The fundamentals of HSBC remain strong and to send a positive message to the market it has increased dividend payments to shareholders by 11%.