Asian Markets Stabilize After Global Rate Cuts
Thursday, October 9, 2008; 5:32 PM
SEOUL, Oct. 9 -- Stock markets in Asia stabilized Thursday, as interest-rate cuts across the region helped ease investor fear.
Europe was also trading higher early in the day but retrenched in the afternoon with most of the indexes showing declines by the end of the day.
Following an orchestrated rate cut in the United States and Europe, the central banks of China, South Korea, Taiwan and Hong Kong all reduced the cost of borrowed money. China lowered its one-year rate Wednesday night, while South Korea, Taiwan and Hong Kong all acted Thursday morning.
The effect on stock markets in Asia was to replace a five-day downward spiral of panic, fear and fast-disappearing wealth with a relatively quiet day of relief.
Japan's benchmark Nikkei average, which plunged nearly 10 percent on Wednesday, ended the day off by 0.5 percent, as political officials debated whether they should pursue new public spending projects to stimulate an economy buffeted by the drop in world auto sales.
Elsewhere in the region, Hong Kong's Hang Seng index gained 3.31 percent, while South Korea's Kospi Index rose 0.6 percent.
South Korea's currency has lost a third of its value against the dollar this year, prompting President Lee Myung-bak to warn Wednesday that currency speculators must stop "greedily pursuing private interests" when their nation is in trouble.
While the Nikkei ended slightly down overall, some buyers were attracted into the market by the low prices for blue-chip stocks. Nippon Steel, Japan's largest steel company, was up more than 6 percent, after falling 12 percent Wednesday. Shares in Toyota Motor also rebounded, but not very much. They were up about 1 percent, after falling 11 percent the day before.
Fear and a worsening economic outlook had pushed indexes from Mumbai to Saudi Arabia to London down sharply Wednesday before central banks around the world orchestrated the interest-rate cut. European markets rebounded slightly later in the day before falling again.
Regulators in Indonesia and Russia halted trading Wednesday after declines of more than 10 percent. Mumbai's Sensex index plunged nearly 6 percent when markets opened, then staged a partial recovery. Markets also fell in Persian Gulf countries, frustrating banking officials there who said economic indicators in the region remain solid.
But Thursday, European markets were higher by between 1 and 2 percent, early in the day. They fell as the day wore on, however, to register losses of between 1 and 3 percent.