Hong Kong: Most Asian stock markets and government bonds rose on Wednesday, on hopes the Bank of Japan and the US Federal Reserve will cut interest rates this week in a bid to spur economic growth, while credit markets showed further signs of recovery.
Major European share markets also opened sharply higher after a massive rally on Wall Street as investors searched through badly-battered stocks for bargains.
Attractive valuations in almost every industry inspired the stock market rally, after a brutal sell-off that has seen Japan’s Nikkei index fall as much as 40% in the past month. But many investors feared the gains may be short-lived.
Central banks around the world are expected to lower benchmark interest rates further in the coming days to shore up sputtering growth amid the worst financial upheaval in 80 years.
The Fed is widely expected to cut its key rate for the ninth time since September 2007 on Wednesday, and the Bank of Japan will consider lowering its policy rate at a meeting on Friday, according to a person with knowledge of the matter. The Bank of England and the European Central Bank were both forecast to lower borrowing costs as well next week.
The Nikkei ended up 7.7%, after plumbing its lowest since 1982 on Tuesday. The index is still down 20% in October, prompting speculation that Japanese banks have taken big hits on their domestic portfolios and will report sharply lower earnings.
Asia-Pacific stocks outside Japan rose at least 2% after touching a four-year low on Tuesday. Hong Kong’s Hang Seng index rose 0.8% after soaring more than 14% on Tuesday, its biggest rally in 11 years. Chinese oil producer CNOOC Ltd led the index higher, rising about 11% after a production update, but a 4.3% drop in shares of HSBC Holdings Plc. eroded some of the morning session gains.
China stocks lost close to 3% while Korea’s see-sawed in yet another dramatic trading session. The benchmark Kospi index closed 3% lower.
Shares in Australia rose 1.3% while India gained 0.4%. Singapore and Taiwan shares also made modest gains.
Rafael Nam contributed to this story.