Asian Markets Soar
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

TOKYO – Asian stock markets soared today in the wake of Wall Street’s overnight surge spurred by the U.S. Federal Reserve’s larger-than-expected interest rate cut.
Japan’s benchmark Nikkei 225 stock index jumped 579.74 points, or 3.7 percent, to close at 16,381.54 points. Hong Kong’s Hang Seng index was up a stunning 1,004 points, or 4.1 percent, at 25,581.13 in afternoon trading.
Stock markets in South Korea, India, Australia, Singapore, Taiwan and the Philippines also advanced, although Chinese shares faltered.
Investors across much of Asia were cheered by a rally in American stocks yesterday after the Fed cut its benchmark interest rate by a half percentage point to 4.75 percent, more than the quarter-point many had expected. The Dow Jones industrial average surged 335.97 points, or 2.51 percent, to 13,739.39 — its biggest one-day point jump in nearly five years.
The Fed’s move reassured markets that have been volatile the last couple months amid worries that tightening credit conditions sparked by rising defaults on subprime mortgages might trigger a recession in the American economy — a vital export market for Asia.
“They did the right thing,” a strategist at Daewoo Securities Co. in Seoul, Joseph Han, said of the Fed’s aggressive cut.
Japan’s chief government spokesman, Kaoru Yosano, also welcomed the Fed’s decision.
“They have reacted very quickly to the realities,” he told reporters.
In Manila, Asian Development Bank President Haruhiko Kuroda said the American rate cut will benefit Asia’s emerging economies.
“It will definitely sustain the strong economic growth in America, which is beneficial to emerging economies in Asia,” he said in a news conference at a forum sponsored by the World Trade Organization.
After the Fed’s move, the Hong Kong Monetary Authority cut its benchmark base interest rate half a percentage point to 6.25 percent. Hong Kong’s currency is pegged to the American dollar, and the HKMA usually follows in lockstep any American interest rate adjustments.
Later today, the Bank of Japan decided to leave its key interest rate unchanged at 0.5 percent, as widely expected.
The world’s central banks like to show they are working together to maintain global stability, and the Bank of Japan would find it hard to raise rates at a time America is cutting them.
Also, there are persistent signs of deflation, or falling prices, in Japan’s economy. And last week the government said the economy contracted in the April-June quarter at an annual rate of 1.2 percent, reversing its initial estimate for a 0.5 percent growth.
Oil prices rose as well today as the rate cut lifted expectations growth will accelerate and increase demand for already tight crude and gasoline supplies.
Light, sweet crude for October delivery added 59 cents to $82.10 a barrel in Asian electronic trading on the New York Mercantile Exchange by early afternoon in Singapore. Overnight oil futures hit an all-time high of $82.38 a barrel after closing the New York floor session at $81.51.
Higher oil prices could spur overall inflation just as the Fed is cutting rates, warned the research head at AB Capital Securities in Manila, Jose Vistan.
“The Fed decision could backfire because we are in the midst of rising commodity prices, particularly energy, oil prices rising to record levels,” he said.
For now, investors are relieved that the Fed acted to ease pressure in credit markets.
Around the region, the Korea Composite Stock Price Index rose 64.04 points, or 3.5 percent, to close at 1,902.65, its highest level since Aug. 9 and the third-biggest point gain ever.
In India, the benchmark Sensex index of the Bombay Stock Exchange jumped 2.5 percent to 16,065 in early trade, the first time it has crossed the 16,000 mark.
But in China, the benchmark Shanghai Composite Index was down 1.1 percent to 5,366.29, dragged down by selling of bank stocks. China’s financial markets tend to move independently of the rest of the world because foreigners are barred from investing in many stocks.
Despite the slip, the Shanghai index is still up more than 100 percent this year.