Relieved investors stormed back into global markets yesterday, sending stock indexes in Hong Kong, South Korea and Japan surging by double digits, after the US Federal Reserve slashed interest rates to help revive the world’s largest economy and opened new credit lines with central banks.
Hong Kong’s Hang Seng Index led the charge in Asia, shooting up 12.8 percent to 14,329.85, and South Korea’s key stock index soared a record 12 percent to 1,084.72.
Japan’s Nikkei 225 stock average gained 10 percent to 9,029.76 as exporters like Toyota and Sony got a boost from the yen continuing to retreat from a 13-year high against the dollar last week.
Benchmarks in Australia, Singapore, Taiwan and the Philippines added 4 percent or more. Russia’s two main indexes were also up sharply.
The markets were primed for an explosive move after plunging in recent weeks.
“This is panic buying after panic selling,” said Linus Yip, a strategist at First Shanghai Securities in Hong Kong.
Wall Street futures said US markets were poised to open higher. Dow Jones industrial average futures were up more than 2 percent.
As trading opened in Europe, stocks in Britain, France and Germany were moderately higher.
The Federal Reserve’s overnight move to cut its key interest rate by half a percentage point was widely expected but still provided a reason to sustain the regional rise that began on Tuesday following days of punishing declines.
Hong Kong’s de facto central bank followed by cutting its key lending by the same amount as the Fed and Taiwan reduced its key interest rate by a quarter point. In Japan, speculation mounted that the central bank would cut its key rate, already at a low 0.5 percent, at a meeting today.
Before the Fed acted, China also lowered its rates by just over a quarter point. The Shanghai Composite index was up 2.9 percent.
Markets also took heart from an announcement that the Fed would temporarily supply new lines of credit worth up to US$30 billion to the central banks of South Korea, Brazil, Mexico and Singapore to help relieve the global credit crisis.
“You’re seeing some pretty aggressive action by the central banks. That’s giving people confidence and obviously these markets are very oversold,” said Tim Rocks, Asia strategist at Macquarie Securities in Hong Kong. “We’ve seen some genuine buying … for the first time investors willing to pick up some of the outrageous bargains out there.”
The US$30 billion facility is the latest in a series of swap arrangements where the Fed provides dollars for reserves of the other nations’ currencies.
The Fed said the new credit lines were designed “to help improve liquidity conditions in global financial markets” by increasing the global availability of US dollars. The move appeared to help loosen lending among the region’s banks.
Also See: Fed cuts key lending rate to 1 percent
North Korea tested nuclear-capable rocket launchers, state media reported yesterday, a day after Seoul detected the launch of about 10 ballistic missiles. The test comes after South Korean and US forces launched their springtime military drills, due to run until Thursday. North Korean leader Kim Jong-un on Saturday oversaw the testing of the multiple rocket launcher system (MRLS), the Korean Central News Agency (KCNA) said. The test involved 12 600mm-caliber ultra-precision multiple rocket launchers and two artillery companies, it said. Kim said the drill gave Pyongyang’s enemies, within the 420km striking range, a sense of “uneasiness” and “a deep understanding
North Korea yesterday fired about 10 ballistic missiles to the sea toward Japan, the South Korean Joint Chiefs of Staff (JCS) said, days after Pyongyang warned of “terrible consequences” over ongoing South Korea-US military drills. Pyongyang recently dashed hopes of a diplomatic thaw with Seoul, Washington’s security ally, describing its latest peace efforts as a “clumsy, deceptive farce.” Seoul’s military detected “around 10 ballistic missiles launched from the Sunan area in North Korea toward the East Sea [Sea of Japan] at around 1:20pm,” JCS said in a statement, referring to South Korea’s name for the body of water. The missiles
‘UNWAVERING FRIENDSHIP’: A representative of a Japanese group that co-organized a memorial, said he hopes Japanese never forget Taiwan’s kindness President William Lai (賴清德) yesterday marked the 15th anniversary of the Tohoku earthquake and tsunami, urging continued cooperation between Taiwan and Japan on disaster prevention and humanitarian assistance. Lai wrote on social media that Taiwan and Japan have always helped each other in the aftermath of major disasters. The magnitude 9 earthquake struck northeastern Japan on March 11, 2011, triggering a massive tsunami that claimed more than 19,000 lives, according to data from Japanese authorities. Following the disaster, Taiwan donated more than US$240 million in aid, making it one of the largest contributors of financial assistance to Japan. In addition to cash donations and
RECOGNITION: Former Fijian prime minister Mahendra Chaudhry said that Taiwan’s New Southbound Policy serves as a stabilizing force in the Indo-Pacific region Taiwan can lead the unification of the Chinese people, Nobel Peace Prize laureate and former Polish president Lech Walesa said in Taipei yesterday, adding that as the world order is changing, peaceful discussion would find good solutions, and that the use of force and coercion would always fail. Walesa made the remarks during his keynote address at a luncheon of the Yushan Forum in Taipei, titled “Indo-Pacific Partnership Prospects: Taiwan’s Values, Technology and Resilience,” organized by the Taiwan-Asia Exchange Foundation with the Ministry of Foreign Affairs. Walesa said that he had been at the forefront of a big peaceful revolution and “if
RSS