Tokyo: Asian share prices were mostly higher in volatile early trade Thursday on hopes that the worst of this week’s massive global selloff was over, dealers said.
Wall Street roared back overnight after early losses to snap a five-day losing streak despite lingering fears of a US recession and another round of bleeding in European equities.
Most Asian markets entered their second day in positive territory, although Hong Kong and Shanghai were mostly flat in early trade, as investors snapped up bargains and crossed their fingers that stability was returning.
“The US market seems to have hit its bottom,” said Toshio Sumitani, a senior strategist at Tokai Tokyo Research Center.
Francis Lun, general manager at Fulbright Securities in Hong Kong, agreed, saying: “It looks like the worst is over.”
Tokyo’s benchmark Nikkei-225 index rose 1.44% by the end of the morning session, reclaiming the 13,000-point level it had slid under two days ago for the first time since 2005.
“The sense of crisis since late last week has taken a breather for now,” said Kazuhiro Takahashi, equity head at Daiwa Securities SMBC.
But he added that market players will still be closely examining US economic indicators and next week’s Federal Reserve meeting for signs on the direction of the world’s largest economy.
The Federal Reserve took the unprecedented emergency move Tuesday of slashing its benchmark interest rate by 75 basis points amid mounting concern that a US housing downturn would shake up the rest of the economy.
In a sign of the jitters still on the markets, Hong Kong shares opened up 1.3% and then quickly lost most of the gains.
“Mood swings are very extreme,” said Andrew Clarke, a sales trader at SG Securities in Hong Kong. “Most investors are still nervous about the US economy. They are still divided on where the US stock market is going.”
But most other markets were up. Singapore soared nearly 7% at one point in early trade before paring gains. Manila jumped more than three percent and Sydney was up more than 2%.
Seoul and Kuala Lumpur were more than 1% higher, with Taipei and Shanghai mostly flat in early trade.
In China, dealers were concerned about a possible tightening of policies to contain overheating after Beijing announced 11.4% economic growth for 2007.
“It’s a very volatile market. It will go up a bit and then there will be some selling pressures, though not as heavy as in previous sessions,” said Peter Lai, director at DBS Vickers.
Banking shares helped lead the gains after US insurance regulators met with banks to raise new capital for bond insurers.
The US economy is seen as entering or nearing a recession amid rising defaults on mortgage payments by so-called “subprime” customers who were issued loans during the last housing boom despite bad credit histories.
The subprime fiasco has caused mounting losses at financial institutions, raising fears that the cash flow to the rest of the economy will also dry up.
European markets fell overnight on indications that the European Central Bank will not follow the Federal Reserve in slashing interest rates despite concerns that a slowdown could also hit the eurozone.