Stock Markets Plunge Worldwide

f2a3fbfe-7f3f-4fc4-9255-2f55d7810842-small.jpg


TOKYO (AP) — Most Asian markets rebounded strongly Wednesday, reversing their recent gut-wrenching plunge as investors welcomed a hefty, surprise interest rate cut by the U.S. Federal Reserve to shore up the sagging American economy.

But analysts said volatile swings were expected to linger in regional trading for some time because the Fed’s quick action, at an emergency meeting, was seen by some traders as a sign American authorities view the U.S. credit crunch as a very serious problem.

“The Fed’s action provided a very positive surprise,” said Tsuyoshi Segawa, strategist at Shinko Securities Co. in Tokyo. “But people are also starting to think that things may be so bad they needed to act.”

Japan’s Nikkei 225 index jumped 3.4 percent in the morning session, recouping some of its 9.3 percent loss the last two days. Australia’s benchmark index rebounded 5.1 percent, snapping a 12-day losing streak.

In Hong Kong, the Hang Seng index – which had plummeted 13.6 percent Monday and Tuesday – surged 7.5 percent

at the opening before trimming gains to 22,945.13, up 5.5 percent, in late morning trading.

Fears of a U.S. recession, which would likely erode demand for Asian exports, have battered the region’s markets since the start of the year. The sell-offs accelerated Monday and Tuesday amid skepticism that a stimulus package announced by U.S. President George W. Bush on Friday wouldn’t do much to support growth.

Jolted by worries of a global recession, the Fed on Tuesday slashed its federal funds rate three-quarters of a percentage point to 3.5 percent, the biggest reduction in this target rate for overnight loans on records going back to 1990. It also was the first time the Fed has changed rates between meetings since 2001.

On Wall Street Tuesday, the Dow Jones industrial average plunged more than 450 points initially but recouped most of its losses as the day progressed to close at 11,971.19, down 128.11 points, or 1.1 percent. Markets were closed Monday for Martin Luther King Jr. Day in the U.S.

In Hong Kong, where the benchmark index had plunged 22 percent since the start of the year, investors took heart from the U.S. rate cut and snapped up stocks that had fallen to attractive levels.

Francis Lun, a general manager at Fulbright Securities, estimated that the Hong Kong market had been oversold by about 15 percent.

“It’s time to recover, but investors still need to be cautious because the fluctuation now is too big,” he said.

The Fed’s move also helped lift the dollar, which rose to 106.90 yen late morning in Tokyo, up from 106.48 yen late Tuesday in New York – another bit of good news for Japanese exporters.

Still, analysts warned that lower interest rates won’t fix bad credit problems – and usually take several months to have an effect on an economy.

“We consider the Fed’s rate cut still insufficient for the global financial markets to completely recover and help the Japanese stocks to fully rebound,” Credit Suisse chief strategist Shinichi Ichikawa said.

© 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy.

 read more | digg story

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: