The Federal Reserve’s move yesterday is having ripple effects throughout Europe and Asia. At first, the markets got a case of the jitters before they took the move for what it was intended to be: a vote of confidence in the U.S. economy, say Jack Ewing and Sewell Chan for The New York Times. European stocks are gaining for the fifth consecutive day. [Italy Forecast for Growth, But Dangers Lurk.]

• BLDRS Asia 50 ADR Index (NASDAQ: ADRA) is down 1% so far today

• SPDR DJ Euro Stoxx 50 (NYSEArca: FEZ) is down 0.25% so far today

Oil prices have shot up 11% in the last two weeks, and they’re showing no signs of stopping today. A refinery strike in France and concerns about Iran’s nuclear program are threatening to make supplies tight in the future, reports Chris Kahn for the Associated Press. United States Oil (NYSEArca: USO) is up 6% in the last five trading days. [How to Harness Energy Using ETFs.]

Inflation seems to be in check, if today’s government report is any indication. Consumer prices rose a scant 0.2%; excluding food and energy, prices actually fell 0.1%. It’s the first decrease since 1982, says Javier C. Hernandez for The New York Times. Nevertheless, investors shook it off and the dollar continued to strengthen. PowerShares DB U.S. Dollar Bullish (NYSEArca: UUP) is up 0.3% so far. [What Fed Rate Hike Means.]

Although the pace may eventually slow down, Barron’s reports that emerging markets still have room left to grow in the long haul. And for the time being, they may be the place to hide out as developed markets still work toward normalcy. In the near-term, growth rates in developed nations are expected to be lackluster, and much less robust than those in the developing world’s. (What you’re missing when you’re not globally invested).

Countries that are resource rich and developing are stockpiling cash and shoring up their balance sheets for a strong recovery and a growth spurt unlike any seen before. Earnings and  economic activity have been revived. Morgan Stanley feels that earnings in emerging markets have bottomed in the third quarter and they’re now set to climb again. (Why frontier markets could be even bigger).

For more stores about emerging markets, visit our emerging markets category.

There are a variety of ways to play emerging markets. There are broad funds, such as iShares MSCI Emerging Markets (NYSEArca: EEM), Vanguard Emerging Markets (NYSEArca: VWO) and iShares MSCI EAFE Index (NYSEArca: EFA).

There are funds that focus on regions, such as Claymore/BNY Mellon BRIC (NYSEArca: EEB) and BLDRSAsia 50 ADR Index (Nasdaq: ADRA).

Finally, there are single-country funds, such as iShares MSCI Brazil (NYSEArca: EWZ) and Market Vectors Vietnam (NYSEArca: VNM).

Keep in mind that the narrower you get in your exposure to emerging and frontier markets, the higher your risk will be. Be sure to have an entry and exit strategy before you invest. (How to follow trends).

South Korea’s growth in the third quarter was at its quickest rate in more than seven years, accompanying China and Singapore in reporting faster growth during the September quarter, reports Gillian Murdoch for Reuters. (How to capture China’s growth).

• iShares MSCI South Korea Index (NYSEArca: EWY)
• iShares FTSE/Xinhua China 25 Index (NYSEArca: FXI)
• iShares MSCI Singapore Index (NYSEArca: EWS)

Japan, Singapore, Hong Kong, Thailand and Taiwan all officially exited a recession in the second quarter.

• iShares MSCI Japan Index (NYSEArca: EWJ)
• iShares MSCI Hong Kong Index (NYSEArca: EWH)
• iShares MSCI Thailand Invest Mkt Index (NYSEArca: THD)
• iShares MSCI Taiwan Index (NYSEArca: EWT)

Japan, however, grew 0.6% in the second quarter – less than expected. (Small-cap plays for Japan).

Singapore’s economy expanded in the second quarter at its fastest rate in almost six years, as a result of a surge in biomedical production and construction. (Sectors pushing Singapore’s growth)

Hong Kong pulled out in the second quarter after its economy grew at a faster-than-expected 3.3% from the previous quarter. (Is Hong Kong facing a correction?)

Thailand’s economy grew 2.3% in the second quarter from the first quarter on a recovering manufacturing sector. (Reasons to watch Thailand)

Taiwan’s economy saw growth for the first time in a year during the second quarter. Officials expect rising demand from China to support the island’s recovery. (Why Taiwan’s heating up).

• iShares S&P Asia 50 Index (NYSEArca: AIA)
• BLDRs Asia 50 ADR Index (NasdaqGM: ADRA)

For more information on Asia, visit our Asia category.

Max Chen contributed to this article.

Asia’s central banks may not be able to tighten monetary policy as high employment begins to pressure politics, remarks Michael Dwyer for Bloomberg. High unemployment along with weak inflation should help keep interest rates on hold for a while.

Accelerating economic growth and an upswing in global trade in the second half of 2009 could provide the necessary foothold for Asian economies. Duncan Wooldridge, chief Asia economist at UBS in Hong Kong, estimates that Asia ex-Japan will grow 4.1% this year and 6.6% next year.

Global projections for Asian markets are fairly optimistic, especially among commodity markets expected to support the region, according to RTTNews.

Asian markets were recently uplifted on hope for the global economy, surge in business confidence in Australia and overall upbeat forecasts for Asian countries, as stated in The Times of India. News on Asian markets include:

• Hong Kong Hang Seng Index. The Hang Seng Index recently finished above 21,000, a first since Aug. 11. The banking sector performed quite well and miners surged on high gold prices.
• Shanghai Composite Index. The Chinese auto industry was up and tourism companies rose in anticipation of increased sales during the National Day holiday.
• Singapore Straits Times Index. Commodities were up, pushed by demand for gold, as was agriculture trading firms.
• Bangkok Stock Exchange of Thailand. Coal producers were up along with energy exploration and production companies.
• Mumbai 30-share Sensex Index. The 30-share Sensex Index recently rose to 16,123.67, a high not seen since June of last year.

• iShares S&P Asia 50 Index (NYSEArca: AIA): up 49.9% year-to-date

• BLDRs Asia 50 ADR Index (NasdaqGM: ADRA): up 28.3% year-to-date

For more information on Asia, visit our Asia category.

Max Chen contributed to this article.

Healthy company reports, new hiring, impressive stock market rallies and other economic data streaming in from Singapore, the Philippines, Australia, Japan and China are providing a strong basis that the region could outpace the recovery in the West, reports Bettina Wassener for The New York Times. Not all countries are recovering at the same pace, though.

• China is just one example of a country that has made a successful post-crisis turnaround. In July, its industrial output increased 10.8% year-over-year and retail sales jumped 15.2%. The government expects a 8% growth in GDP and economists estimate a 11.9% expansion in 2010.
• On the other hand, Japan remains deeply in a recession. One economist says the country has seen a short-term rebound, but long-term prospects are still up in the air.

Asia has been supported by a relatively stronger financial system since banks in the region did not deal in the complex financial instruments that caused the collapse in Western banks.

However, Asia’s recovery has depended heavily on government stimulus. Exports also remain depressed and a drawn out downturn in the West could be problematic for Asian countries that rely on exports.

• BLDRs Asia 50 ADR Index (ADRA): up 27.4% year-to-date

• iShares S&P Asia 50 Index (AIA): up 43% year-to-date

For more information on Asia, visit our Asia category.

Max Chen contributed to this article.

The Tankan survey of big manufactures in Japan came in at -48, up from a -58 registered three months earlier, reports Bettina Wassener for The New York Times. The negative reading still shows ubiquitous pessimism among manufacturers. Japanese companies could remain cautious in the short-term, and increase layoffs and other cost savings.

The official purchasing managers’ index (PMI) of China climbed for the fourth month in a row in June, which shows a Chinese economy expanding rather than contracting. The rises were largely aided by stimulus spending in China.

South Korea calculated that exports in June were down 11.3% year-over-year, a small silver lining compared to the 28.5% drop in May.

Many Asian economies benefited from the massive and quick stimulus measures, which helped them mitigate what could have been a long and difficult downturn.

• BLDRs Asia 50 ADR Index (ADRA): up 15.1% year-to-date

• iShares S&P Asia 50 Index (AIA): up 31% year-to-date

For more information on Asia, visit our Asia category.

Max Chen contributed to this article.

In South Korea, the Korea-ASEAN Special Summit will hopefully increase diplomatic ties with ASEAN, a geopolitical and economic organization of 10 countries in Southeast Asia with a combined GDP of $1.3 trillion, and promote regional economic cooperation, reports Ahn Choong-yong for The Korea Herald.

Recently, the ASEAN+3 (China, Japan and Korea) has developed a framework on regional cooperation that would include India, Australia and New Zealand to form an East Asian Summit. East Asia is seen to have the potential to form a collective group such as the EU or NAFTA.

An East Asian Free Trade Agreement (FTA) would benefit the region through geographic proximity, complementary endowments of production factors and growing economic ties. As the area becomes more of a free market with fewer economic barriers, businesses will export more and have more efficient economies of scale. Member countries will also have increased inflows of foreign direct investment, which would create more jobs and transfer technology.

But China and Japan, both vying for regional dominance, may hinder FTAs with ASEAN and could prolong the transition into an EAST Asian FTA.

• BLDRs Asia 50 ADR Index (ADRA): up 17.2% year-to-date

• iShares S&P Asia 50 Index (AIA): up 30.7% year-to-date

Max Chen contributed to this article.

Foreign investments have offered higher returns that domestic investments, writes Donald Jay Korn for Financial Planning. The 10-year annualized return of international stock funds were doing slightly better than domestic stock funds. On average, emerging market funds showed a 7.7% return per year for the last 10 years. Investors also can’t ignore the fact that two-thirds of the world’s market capitalization lies outside the United States.

Korn provides some interesting points on why foreign investments are still an essential part of a diversified portfolio.

• Safety. After the spectacular fall of Asian and European stocks, many people are investing defensively. International equity managers are looking into large caps and other big brand names that they are already familiar with.
• Value. Foreign energy companies could be the ultimate winners when oil prices start to rise again. The increased revenues will go to the firms with lots of reserves on hand.
• Dividends. International money managers look for companies with high dividends. Foreign companies usually have higher yields when compared to U.S. companies.
• Asia. Japan is still a large foreign market, but many think the country is too reliant on exports and would be subject to the repercussions of a strong yen. However, Japanese company balance sheets are strong, households save and lots of their companies are trading below book value. Other Asian markets have a higher risk but there are potential higher rewards.
• Convertibles and Bonds. Asian convertibles allow investors to convert to the issuer’s common stock. Yields may be in the double digits and the best ones can be found in the emerging markets. Total returns for high quality foreign corporate bonds could also reach into the double-digits.

iShares MSCI Emerging Markets Index (EEM): up 16.5% year-to-date

PowerShares BLDRS Asia 50 ADR Index Fund (ADRA): up 5.4% year-to-date

Max Chen contributed to this article.

Asia Pacific holiday tours were canceled shortly after the deadly virus was reported as an outbreak in Mexico. A series of government warnings were honored and airports from Indonesia to Australia tightened their screening of travelers, reports Jeremiah Marquez for The Los Angeles Times. The World Health Organization (WHO) raised its global alert level on Monday as infections cropped up in Europe. Asian countries, including South Korea and New Zealand, found suspected cases. In North America, the outbreak remains a little more under control for the time being.

Amid the recent economic conditions, any possible hope for a market recovery seem laid to rest as the outbreak of the swine flu has markets arrested and investors weary. This does not support consumerism at any level, and airlines, hotel companies and other travel-linked stocks took another hit.

Will the outbreak of a deadly virus known as SARS be a guide for Asia this time around?

Vidya Ranganathan for Reuters reports that in 2003, Asia was feeling the effects of the October 2002 Bali bombings, a tentative world recovery was under way from the bursting of the technology bubble and there was conflict in Iraq.

Today, other indirectly affected economic segments, such as job losses, income losses, and so on, may make it harder to pinpoint effects of the swine flu outbreak versus an already crumbling economy. SARS-affected economies experienced drops in retail sales growth in the order of 5% to 10% in early 2003. Overall growth was ironically helped by a simultaneous decline in imports and investment.

Meanwhile, China had implemented price controls upon SARS related drugs, tax-waivers for affected industry and and interest subsidies for tourism sectors.

• PowerShares BLDRS Asia 50 ADR Index Fund (ADRA): up 3.6% year-to-date; down 1.4% on Tuesday

The Toyota Tundra plant in San Antonio, TX, is an example, as sales and production are off, so workers are alternating between the assembly line, the classroom, and community service, while cutting checks from Toyota all the while.

Clifford Krausse for The New York Times reports the sales slowdown, and some of the accompanying business problems, that have engulfed the Detroit automobile makers are rapidly spreading to the world’s strongest auto companies. Toyota, Honda, Nissan and Hyundai are all putting off expansion and are taking the lowered demand in autos and trucks in stride.

Honda is putting off plans for a diesel-powered vehicle launch in the U.S. mostly because of the higher cost of diesel fuel. Honda had said it would introduce a four-cylinder diesel sedan to complement its Acura luxury brand and move from there to diesel SUVs and vans with V-6 engines.

Nissan is going ahead with plans to introduce their V-6 Maxima sedan to launch in 2010. None of the carmakers are certain where fuel prices or the economy will be in that year, but they are banking on pent-up demand, reports UPI.com.

Earlier in the year, Honda opened a huge plant in the heartland of America’s farming capital, among layoffs and plant closings. Honda workers in Indiana have been watching the debate over the proposed $25 billion rescue plan of GM, Ford and Chrysler with mounting frustration. These Honda workers are just as much a part of the U.S. auto industry , and although the name “Honda” on a car conjures a foreign image, the car is rightfully an American-built vehicle, reports Andrea Hopkins for Reuters.

The biggest hurdle ahead lies in the possibility that if the economy and current sales pace remains , or gets worse, laying off full time workers may be a must. So far the companies have cut temp workers but the future lies in how deep and prolonged the recession will be.

• iShares MSCI Japan Index (EWJ): down 34% year-to-date; Toyota 4.7%; Honda 1.9%

• BLDRs Asia 50 ADR Index (ADRA): down 43.2% year-to-date; Toyota 13.1%; Honda 5.2%