In wake of Fed, Bank of Japan seen cutting rates on Friday
US bond yields rise from record lows, JGB yields sink
Bank stocks rally with borrowing costs expected to fall
HONG KONG - ASIAN stocks markets climbed on Wednesday after the US Federal Reserve slashed its key interest rate to historic lows in an effort to pull the world's largest economy out of recession.
But enthusiasm was tempered by a mix of lingering worries about the US economy and a weakening dollar - which could add to the woes of Asia's exporters.
Asian bourses opened higher after the US central bank announced a steeper-than-expected cut of 0.75 per cent that eased rates at which banks lend to one another to a range of zero to 0.25 per cent - unprecedented in the Fed's 95-year history.
It also promised to use 'all available tools' to heal the US.economy.
The Fed's bold actions surprised Wall Street - most analysts expected a 0.5 per cent cut - and raised hopes of lower interest rates and cheaper money across Asia. Hong Kong's central bank slashed rates as a result, and speculation mounted of further easing from the Bank of Japan.
'Every central bank is pumping loads of liquidity into the markets and this is very positive for the markets,' said John Mar, co-head of sales trading, Daiwa Securities SMBC Co in Hong Kong.
In Tokyo, the Nikkei 225 stock average rose 44.50 points, or 0.5 per cent, to 8,612.52 after initially rising 1.1 per cent. Hong Kong's Hang Seng Index rose 1.5 per cent to 15,361.58.
South Korea's Kospi added 0.7 per cent to 1,169.75, while benchmarks in mainland China, Singapore, Thailand and Australia also gained.
Trade was far more cautious than in the US, where markets soared on the Fed's move. The Dow rose 359.61, or 4.2 per cent, to 8,924.14 and the broader Standard & Poor's 500 index advanced 44.61, or 5.1 per cent, to 913.18.
Analysts said the Fed's indications that it would do whatever is necessary to help bring an end to the longest economic contraction in a quarter-century underscored just how deep America's recession is.
'Investors in Asia have less confidence than their American counterparts in the Fed's ability to engineer an economic recovery,' said Dariusz Kowalczyk, chief investment strategist for CFC Seymour in Hong Kong.
Tokyo's gains were limited by the souring dollar and worries about Honda, whose shares slid 4.2 per cent. Japan's No 2 automaker said late in the day it was slashing its profit forecast for the fiscal year and cutting managers' pay cut amid a global downturn in the auto industry.
Also weighing on the markets, analysts said, was a modest drop in Wall Street futures, suggesting Tuesday's rally would quickly fizzle. Dow futures were down 62 points, or 0.7 per cent, at 8,852 and S&P500 futures were off 7.8 points, or 0.9 per cent, at 905.
Hong Kong's de facto central bank followed the Fed's move by cutting its base rate by a full percentage point to 0.5 per cent.
Because the territory's currency is pegged to the dollar, the Hong Kong Monetary Authority's actions usually follow the Fed's.
In currencies, the dollar traded at 88.78 yen, down from 88.91.
The euro strengthened further to 1.4061.
Oil prices rose, with light, sweet crude for January delivery up 65 cents to US$44.25 a barrel in Asian trade. The contract fell 91 cents to settle at US$43.60 a barrel overnight.
TOKYO Japan's Nikkei stock index ended up 0.52 per cent on Wednesday after the US Federal Reserve's decision overnight to cut interest rates effectively to zero.
The benchmark Nikkei-225 index rose 44.50 points to 8,612.52. The Topix index of all first section issues gained 9.84 points, or 1.19 per cent, to 838.46.
KUALA LUMPUR Malaysian shares closed 0.9 per cent higher on Wednesday in tandem with regional bourses after the US Federal Reserve cut interest rates to almost zero, dealers said.
The Kuala Lumpur Composite Index gained 7.70 points to close the day at 862.50.
HONG KONG Hong Kong share prices closed 2.2 per cent higher on Wednesday, supported by gains of property stocks after the US Federal Reserve cut interest rates to near zero, dealers said.
The benchmark Hang Seng Index was 330.31 points up at 15,460.52. Turnover was light at HK$56.40 billion (S$10.5 billion).
The market was also boosted by commodity stocks on expectations of a crude oil supply cut, the analysts said.
SHANGHAI Chinese shares closed up 0.09 per cent on Wednesday as weakness in banks and other large caps almost eroded early gains fuelled by hopes of fresh interest rate cuts from Beijing, dealers said.
The benchmark Shanghai Composite Index, which covers A and B shares, rose 1.81 points to 1,976.82 on turnover of 68.4 billion yuan (S$14.5 billion dollars).
The Shanghai A-share index added 1.86 points, or 0.09 per cent, to 2,075.93 on turnover of 68.2 billion yuan, while the Shenzhen A-share index was up 5.89 points, or 0.93 per cent, to 638.93 on turnover of 34.3 billion yuan. -- AFP, BERNAMA, THOMSON REUTERS
