Asia-Pacific markets lower as US rate cut disappoints

Most Asia-Pacific equities markets were lower Wednesday on disappointment over Tuesday’s interest rate cut from the US Federal Reserve and after accompanying comments that US economic growth is slowing down. There were exceptions. The Kospi index was up 0.12 percent to 1,927.45 in South Korea while India’s Sensex added 0.42 percent to 20,375.87.

In Australia, however, the Sydney Ordinaries fell 0.93 percent to 6,675.4 and the S&P/ASX200 was 0.98 percent lower to 6,615.2. The Straits Times index was down 1.11 percent to 3,549.25 in Singapore. The Shanghai Composite dropped 1.54 percent to 5.095.54 and Taiwan’s Taiex index fell 1.71 percent to 8,490.84. In Hong Kong the Hang Seng index was down 2.41 percent to 28,521.06.

Tokyo’s markets were hurt not only by disappointment over the US interest rate cut but also by comments from Morgan Stanley that predicted a “mild recession” for Japan. The Nikkei 225 was 0.7 percent lower to 15,923.26 and the Topix index dropped 0.64 percent to 1,556.92, but the Mothers market of small and mid-caps managed a 1.01 percent gain to 886.66. The oil sector and traders saw gains after crude oil prices rose overnight, but the real estate sector declined on the recession comments.

The markets both in London and on the continent were affected by an announcement that the US Federal Reserve, the Bank of England, the European Central Bank, the Bank of Canada and the Swiss National Bank would work in concert to inject more money into the banking system. Under the plan, currency swap lines would put an additional $24 billion into the system and two auctions later in the month will inject up to $40 billion in liquidity.

In Europe, markets were mixed but mostly higher. The pan-European FTSE Eurofirst 300 added 0.38 percent to 1,546.34, while the CAC-40 gained 0.32 percent to 5,743.32 and the Dax was up 0.83 percent to 8,076.12. Madrid’s IBEX, however, dropped 0.19 percent to 15,860. The oil and steel sectors were higher, but utilities were mixed and the banking and automobile manufacturing sectors saw declines.

London’s equities markets were mixed as well. The FTSE 100 added 0.35 percent to 6,559.8 but the FTSE 250 was 0.05 percent lower to 10,643. House builders saw gains. Banks and the oil sector were mixed, with some gains in oil coming from a possible new discovery in an offshore Brazilian field. The retail sector was mixed as well.

New York’s markets closed higher on the session after seeing the Dow Jones Industrial Average climb by nearly 300 points and then fall to over 100 points over Tuesday’s close on uncertainty about the effectiveness of the Federal Reserve’s interest rate cut and the newly announced cooperation between the Fed and several other central banks to inject cash into the banking system. The Dow ended the day 0.31 percent higher to 13,473.9 while the Nasdaq Composite was up 0.71 percent to 2,671.14 and the S&P 500 gained 0.61 percent to 1,486.59. There were gains in the oil sector after crude oil prices added more than $4 per barrel on the session and the telecommunications sector was up, but banks were lower on more news of writedowns.

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