Most Asian markets rebounded yesterday, reversing their recent gut-wrenching plunge as investors welcomed a hefty, surprise rate cut by the US Federal Reserve to shore up the sagging US economy.
But European markets slipped in early trading.
Analysts said the market turmoil would linger for some time because the Fed's emergency action was seen by some as a sign US authorities view the credit crunch as a very serious problem.
"The Fed's action provided a very positive surprise," Shinko Securities Co strategist Tsuyoshi Segawa said in Tokyo. "But people are also starting to think that things may be so bad they needed to act."
In Hong Kong, the Hang Seng index surged 10.7 percent -- its biggest gain 10 years -- to 24,090.17, regaining much of the 13.7 percent it had shed over the previous two days.
Japan's Nikkei 225 index rose 2 percent to close at 12,829.06 after tumbling 9.3 percent the previous two days, while India's Sensex was up 5.7 percent in afternoon trading, recapturing nearly half its 12 percent losses from Monday and Tuesday.
In Shanghai, China's benchmark index, which sank 12 percent earlier this week, bounced back 3.1 percent, and Australia's market rebounded 4.4 percent, snapping a 12-day losing streak.
The Fed on Tuesday slashed its federal funds rate three-quarters of a percentage point to 3.5 percent, the biggest reduction in this target rate for overnight loans on records going back to 1990. It also was the first time the Fed has changed rates between meetings since 2001.
On Wall Street on Tuesday, the Dow Jones industrial average plunged more than 450 points initially but recouped most of its losses as the day progressed to close at 11,971.19, down 128.11 points, or 1.1 percent.
US stock index futures showed that Wall Street was poised for a modest drop yesterday. Dow futures were down 40 points, or 0.3 percent, to 11,911. Standard & Poor's 500 futures were down 5.5 points, or 0.4 percent, to 1,303.8.
In Europe, where investors had a chance to cheer the Fed's cut the previous day, the UK's FTSE 100 was down 1 percent, while France's CAC 40 slid 0.9 percent and Germany's DAX was down 0.7 percent.
Investors in Asia were already factoring in another US rate cut of as much a half-point when the Fed holds its regular meeting next Tuesday and Wednesday, traders said.
But Asian markets could slide back if Wall Street continues to decline in coming sessions, they said.
The Fed's move initially helped the US dollar, but later the US currency dropped to ¥106.31 from ¥106.48 on Tuesday in New York.
Asian-based companies welcomed the Fed's move, too.
"Anything that helps consumer sentiment is good for our business," said Bruce Rockowitz, president of Li & Fung, a Hong Kong-based exporter that sources products for major brands and retailers worldwide, including Wal-Mart Stores.
"From a psychological effect, it's given people in the US at least comfort that the government will do whatever they can to solve this crisis," he said.
Still, analysts warned that lower interest rates won't fix bad credit problems -- and usually take several months to have an effect on an economy.
"We consider the Fed's rate cut still insufficient for the global financial markets to completely recover and help the Japanese stocks to fully rebound," Credit Suisse chief strategist Shinichi Ichikawa said.
Intel Corp chief executive officer Lip-Bu Tan (陳立武) is expected to meet with Taiwanese suppliers next month in conjunction with the opening of the Computex Taipei trade show, supply chain sources said on Monday. The visit, the first for Tan to Taiwan since assuming his new post last month, would be aimed at enhancing Intel’s ties with suppliers in Taiwan as he attempts to help turn around the struggling US chipmaker, the sources said. Tan is to hold a banquet to celebrate Intel’s 40-year presence in Taiwan before Computex opens on May 20 and invite dozens of Taiwanese suppliers to exchange views
Application-specific integrated circuit designer Faraday Technology Corp (智原) yesterday said that although revenue this quarter would decline 30 percent from last quarter, it retained its full-year forecast of revenue growth of 100 percent. The company attributed the quarterly drop to a slowdown in customers’ production of chips using Faraday’s advanced packaging technology. The company is still confident about its revenue growth this year, given its strong “design-win” — or the projects it won to help customers design their chips, Faraday president Steve Wang (王國雍) told an online earnings conference. “The design-win this year is better than we expected. We believe we will win
Chizuko Kimura has become the first female sushi chef in the world to win a Michelin star, fulfilling a promise she made to her dying husband to continue his legacy. The 54-year-old Japanese chef regained the Michelin star her late husband, Shunei Kimura, won three years ago for their Sushi Shunei restaurant in Paris. For Shunei Kimura, the star was a dream come true. However, the joy was short-lived. He died from cancer just three months later in June 2022. He was 65. The following year, the restaurant in the heart of Montmartre lost its star rating. Chizuko Kimura insisted that the new star is still down
While China’s leaders use their economic and political might to fight US President Donald Trump’s trade war “to the end,” its army of social media soldiers are embarking on a more humorous campaign online. Trump’s tariff blitz has seen Washington and Beijing impose eye-watering duties on imports from the other, fanning a standoff between the economic superpowers that has sparked global recession fears and sent markets into a tailspin. Trump says his policy is a response to years of being “ripped off” by other countries and aims to bring manufacturing to the US, forcing companies to employ US workers. However, China’s online warriors