Global Stock markets are once again on the slide with trading in New York opening at new lows. The U.S Federal Reserve slashed interest rates in the biggest rate cut in 23 years but this failed to have an immediate effect. In Russia the RTS index rallied following the cut before falling back again.

Russian export in danger

Experts fear that with the global economy teetering on the brink of recession, global demand for energy and other commodities - Russia’s major exports - will plummet.

Analyst Igor Prokhaev from Troika Dialog says the falls are likely to continue.

“Very sharp drops in developed markets will make fund managers reduce their risks in emerging markets. And Russia is the number one stock to sell because it’s very liquid,” Prokhaev said.

But analyst Aleksandr Potavin from Atlanta Capital in Russia says that in the medium to long term Russia is well-equipped to ride out the storm.

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“No Russian companies have invested in American mortgage businesses, so I don’t think we are expecting any big losses. And the high level of consumer spending in Russia will also support the performance of Russian companies,” Potavin said.

U.S. Treasury makes a move

In a surprise move on Tuesday, the U.S. Federal Reserve slashed the benchmark interest rate by 0,75%.

The hefty cut was a bid to lend support to an economy some fear is teetering on the edge of recession.

It leaves the key federal funds rate, which governs overnight lending between banks, at 3.5%, its lowest level since 2005.

It's the first time the Fed has agreed to an extraneous rate cut since the aftermath of September 11 in 2001.

After announcing the move, Treasury secretary Henry Paulson stressed that the fundamentals of the U.S. economy were good and that it remained healthy in the long-term.

“The U.S. economy is resilient: unemployment remains low, and job creation continues at a modest pace. The structure of our economy is sound and our long-term economic fundamentals are healthy. I have visited countries around the world and the more I see, the more I am sure that our workers are the most productive and innovative anywhere. But we need to do something now, because the short-term risks are clearly to the downside. The potential benefits of quick action to support our economy have become clear,” Paulson said.