Asian stocks soar on Wall Street’s lead

Asian stocks soar on Wall Street’s lead
AFP
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First Published: Thu, Nov 29 2007. 11 50 AM IST
Updated: Thu, Nov 29 2007. 11 50 AM IST
Tokyo: Asian stocks staged a powerful rally in early trade on 29 November2007 after Wall Street rebounded for a second straight day on hopes of another US interest rate cut to bolster the economy, dealers said.
Worries over the US subprime loan crisis also receded although dealers said the fallout from recent credit market turmoil was unlikely to have run its course yet. A sharp fall in oil prices also provided a boost.
Markets soared around the region. Hong Kong leapt almost 4.0%, Tokyo jumped 2.4%, Singapore added 2.7%, Shanghai rose 1.88% and Sydney was up 1.5%.
Elsewhere, Jakarta put on 2.1%, Manila climbed 2.9% and Taipei advanced 2.0%.
Dealers took their cue from New York where the Dow Jones index surged 2.55% Wednesday after comments from Federal Reserve vice chairman Donald Kohn lifted expectations of a US rate cut in December, dealers said.
Kohn said the central bank must be “nimble” in policy and “should not hold the economy hostage” to teach a lesson to financial market speculators.
“If interest rates are going down that’s always good for markets as it lowers the cost of doing business,” said Michael Heffernan, a private client advisor at Australia’s Austock Securities.
“Interest rates are at the fulcrum of the seesaw and, depending on which way they swing, can determine where the market goes,” he said.
The US rally gained steam after the Fed’s Beige Book report suggested the world’s largest economy is still growing but at a slow pace — reinforcing the notion that the central bank may trim rates again, dealers said.
“The US rebound and a lower yen gave investors an excuse to buy stocks,” said Yumi Nishimura, manager of equity marketing at Daiwa Securities SMBC in Tokyo.
Stocks were also buoyed by a slump in oil prices after New York crude oil futures fell 4.0%Wednesday, before rebounding slightly in Asian trade.
Investors shrugged off news Wednesday that US existing-home sales fell 1.2% in October as prices plunged.
World markets have been shaken in recent months by a US housing slump and related credit squeeze as American homeowners with patchy credit histories default on their subprime, or high risk, mortgages.
The rate cut hopes added to positive sentiment over news earlier in the week of a big investment in troubled banking giant Citigroup by Abu Dhabi investors.
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First Published: Thu, Nov 29 2007. 11 50 AM IST