Business | Markets
Asian stocks gain on US Fed cut
Asian stocks rose to a five-week high, led by developers, after the Federal Reserve cut the main US interest rate to as low as zero for the first time and said it will use "all available tools" to stimulate the economy.
- Bloomberg
- Published: 08:21 December 17, 2008
Tokyo: Asian stocks rose to a five-week high, led by developers, after the Federal Reserve cut the main US interest rate to as low as zero for the first time and said it will use “all available tools'' to stimulate the economy.
Sun Hung Kai Properties Ltd. surged 4.6 per cent after Hong Kong's monetary authority lowered borrowing costs because the city's currency is pegged to the dollar. Mitsubishi Estate Co., Japan's second-largest developer, rose 9.6 per cent as traders increased bets the nation's central bank will reduce interest rates.
Newcrest Mining Ltd. added more than 3 per cent in Sydney as the US dollar declined, boosting the appeal of gold as an alternative investment.
“This is a strong statement that the US is doing all it can to support the market and prevent a sharp economic deterioration,'' said Masahiko Ejiri, who manages Asian equities at Tokyo-based Mizuho Asset Management Co., which oversees $26 billion.
“It's also a sign that things are getting worse. There will be less room for them to maneuver from here.''
The MSCI Asia Pacific Index climbed 2.7 per cent to 89.80 as of 11:42 am in Tokyo. About three stocks rose for each that dropped. The measure has lost 43 per cent this year, as the global credit crisis triggered by the collapse of the US housing market pushed the world's largest economies into recession.
Japan's Nikkei 225 Stock Average advanced 1.1 per cent to 8,659.16. All other Asian benchmark indexes gained.
The Fed cut its target rate for overnight loans between banks to a range of zero to 0.25 per cent, a record low. A senior Fed official indicated that the bank will now shift its policy focus to asset purchases as a means of providing liquidity to the financial system.
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