Asian stocks rally after Fed cut
Thursday, 20 March 2008
TOKYO, March 19 (AP): Asian stock markets opened sharply higher Wednesday as investors welcomed a hefty US interest rate cut and a rally on Wall Street overnight.
Sentiment was also lifted by better-than-expected earnings from major US investment banks Goldman Sachs and Lehman Brothers, easing concerns about fallout from the global credit crisis.
Japan's benchmark Nikkei 225 index jumped 2.8 per cent to 12,292.73 at the end of the morning trading session, while Hong Kong's Hang Seng index surged nearly 3.0 per cent.
Australia's main index was up 3.7 per cent and markets in South Korea, China and Singapore were also sharply higher.
In a bid to shore up the sagging US economy and bring relief to the struggling financial sector, the Federal Reserve Tuesday slashed its key interest rate by three-quarters of a percentage point to 2.25 per cent, its lowest since December 2004.
While many investors were expecting the Fed to cut rates a full percentage point, they quickly overcame some initial disappointment, especially since a 0.75 point cut is still substantial. The Fed began lowering rates exactly six months ago, after the credit markets seized up due to soaring defaults in sub prime mortgages.
The Dow Jones industrial average soared 420 points, or 3.51, to 12,392.66 Tuesday. That was its biggest one-day point gain in more than five years.
Investors were also heartened by better-than-expected earnings from Goldman Sachs Group and Lehman Brothers Holdings, which came out just a day after markets worldwide were shocked by Monday's news that JP Morgan Chase had bought rival investment bank Bear Stearns for $2 per share, which amounts to less than $250 million. That sparked concerns about the full extent of the credit crisis.
Sentiment was also lifted by better-than-expected earnings from major US investment banks Goldman Sachs and Lehman Brothers, easing concerns about fallout from the global credit crisis.
Japan's benchmark Nikkei 225 index jumped 2.8 per cent to 12,292.73 at the end of the morning trading session, while Hong Kong's Hang Seng index surged nearly 3.0 per cent.
Australia's main index was up 3.7 per cent and markets in South Korea, China and Singapore were also sharply higher.
In a bid to shore up the sagging US economy and bring relief to the struggling financial sector, the Federal Reserve Tuesday slashed its key interest rate by three-quarters of a percentage point to 2.25 per cent, its lowest since December 2004.
While many investors were expecting the Fed to cut rates a full percentage point, they quickly overcame some initial disappointment, especially since a 0.75 point cut is still substantial. The Fed began lowering rates exactly six months ago, after the credit markets seized up due to soaring defaults in sub prime mortgages.
The Dow Jones industrial average soared 420 points, or 3.51, to 12,392.66 Tuesday. That was its biggest one-day point gain in more than five years.
Investors were also heartened by better-than-expected earnings from Goldman Sachs Group and Lehman Brothers Holdings, which came out just a day after markets worldwide were shocked by Monday's news that JP Morgan Chase had bought rival investment bank Bear Stearns for $2 per share, which amounts to less than $250 million. That sparked concerns about the full extent of the credit crisis.