Metal shares rally in Asia, economic fears linger

Metal shares rally in Asia, economic fears linger
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First Published: Wed, Nov 26 2008. 09 50 AM IST
Updated: Wed, Nov 26 2008. 09 50 AM IST
Hong Kong: Stocks in Japan and Australia fell on Wednesday after a report showed the US economy shrank by the most since 2001, underscoring sharply slowing global demand, while South Korean shares were boosted by steelmakers after BHP Billiton killed its bid for Rio Tinto.
Wall Street stocks rallied after the Federal Reserve unveiled an $800 billion effort to heal the US mortgage market and to aid consumer lending, with Washington racking up a staggering $8.3 trillion bill to rescue companies and keep the financial system from collapsing.
Oil prices were steady around $51 a barrel, after dropping nearly 7% on Tuesday on fears a global recession will weigh on demand, helping to support the US dollar.
With the year end approaching, a relief to markets battered by the financial crisis, investors were content to make only small adjustments to their portfolios given little evidence that widespread risk taking for higher returns had made a comeback.
Japan’s Nikkei share average slipped 1.3%, weighed by a mix of major exporters such as Toyoto Motor Corp and defensive names like Takeda Pharmaceutical Co Ltd.
Australia’s benchmark S&P/ASX 200 index edged down 0.8%, with Rio Tinto stock plummeting 32%.
The global miner’s chairman said the company would not need to raise equity and is confident it can sell assets to pay debt, a day after rival BHP Billiton pulled its $66 billion offer for Rio, citing adverse market conditions.
The MSCI index of Asia-Pacific stocks excluding Japan was up 1%, extending gains made in the past three sessions.
Hong Kong’s Hang Seng index was up about 2.5%, helped by metal producer Chalco’s 7.5% jump as the crumbled BHP and Rio deal was seen opening opportunities in other firms.
The US dollar inched up against the euro as market players remained sceptical that the latest U.S. measures to boost consumer lending would ease concerns about the financial crisis.
Worries over the global economic downturn and credit jitters have kept investors wary of taking risks, limiting selling of the dollar and yen, traders said.
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First Published: Wed, Nov 26 2008. 09 50 AM IST
More Topics: Markets | Global | Asia | Economy | Financial Crisis |