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Asian stocks rebound but caution prevails

Asian stocks rebound but caution prevails
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First Published: Wed, Dec 03 2008. 09 19 AM IST
Updated: Wed, Dec 03 2008. 09 19 AM IST
Hong Kong: Asian stocks and oil recovered on Wednesday following recent sell-offs, but low-risk assets such as US Treasuries also retained their lustre, highlighting investor caution about the weakening global economy.
The euro and the sterling fell ahead of meetings on Thursday by the European Central Bank and the Bank of England, which are expected to result in hefty interest rate cuts as policymakers try to avoid off a deep and prolonged recession.
Governments and central banks worldwide are passing more measures to stabilise financial markets, including potential help being discussed for struggling US auto makers, but it will take some time to restore battered consumer and investor confidence.
The MSCI index of Asia-Pacific stocks outside Japan rose 1.3% as of 8:25am (IST) rebounding from a 4.1% slump in the prior session.
The gains tracked a rally in Wall Street on Tuesday that came following a pledge by global industrial bellwhether General Electric to leave its dividend intact despite the worsening economy.
Still, the outlook for the global economy continues to weaken, with Australia saying on Wednesday that growth in the last quarter was at its slowest pace in eight years.
Corporate profits worldwide are also under threat as consumers cut back spending. US auto makers on Tuesday posted a nearly 37% plunge in monthly sales that brought levels to their lowest in since 1982, reinforcing their plea for a bailout from the US government.
Asian markets gained, nonethless, led by shares seen as oversold, though that was balanced by weakness in some auto makers such as Honda Motor and technology exporters such as Samsung Electronics whose profits are set to suffer.
Tokyo’s Nikkei average advanced 1%, clawing back some ground after a drop of more than 6 percent on Tuesday.
Shares in Hong Kong, Shanghai, Singapore, and Australia, gained more than 1% each, but markets in South Korea % and Taiwan posted modest losses.
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First Published: Wed, Dec 03 2008. 09 19 AM IST
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