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Asia markets mixed; Nikkei slides despite rate cut
(Agencies)
Updated: 2008-10-31 17:23 BANGKOK, Thailand -- Asian markets were mixed Friday as Japanese stocks fell despite the first rate cut in seven years while shares in India soared to catch up with the global market rally after a holiday there.
Investors were also digesting data overnight that confirmed the US economy, a major export market, had contracted in the third quarter. Tokyo's Nikkei 225 index sank 5 percent to 8,576.98 after the Bank of Japan cut its key interest rate from 0.5 percent to 0.3 percent. Investors who wanted a full quarter-point cut viewed the step as half-hearted. South Korea's market extended the previous session's 12 percent rally with the Korea Composite Stock Price Index gaining 2.6 percent to 1,113.06. Australia's key index climbed out of negative territory to close 0.4 percent higher. "Clients are a little more willing to re-enter the markets as the sense of panic has subsided a bit and valuations have been hammered to ridiculous levels," said Andrew Yates, vice president of foreign institutional sales at Asia Plus Securities in Bangkok. "Obviously further volatility is likely but funds are picking up stocks at cheap levels for end of month rebalancing of portfolios," he said. Hong Kong's Hang Seng slid as the afternoon progressed, falling 3.7 percent to 13,801.72 after vaulting 12.8 percent Thursday. Smaller Asian markets such as the Philippines and Taiwan both rose 4 percent or more, while Jakarta's main index shot up 5.9 percent. In India, the benchmark Sensex index surged 5.6 percent to 9,547 as traders caught up with Thursday's rally in Asian markets, when investors cheered a US Federal Reserve rate cut and further central bank steps to boost dollar liquidity in emerging markets. US stock index futures were about 1 percent lower, suggesting Wall Street would pull back Friday, a day after the Dow Jones industrial average rose 189.73, or 2.11 percent, to 9,180.69. The S&P 500 index rose 2.6 percent to 954.09. Japanese stocks were modestly lower for much of the day after jumping nearly 10 percent Thursday on expectations of a rate cut by the central bank. But when the Bank of Japan announced the smaller-than-expected cut, the first since March 2001, the market fell sharply. With interest rates in Japan already the lowest in the developed world, many analysts doubt looser monetary policy will do much to stimulate the world's second largest economy. "The move fell short of the widely expected cut to 0.25 percent," said Yumi Nishimura, market analyst at Daiwa Securities SMBC. "But the market also welcomed the move as a step to stay in line with the rest of the world." |
