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Fed's cut leaves Asian markets cold
HONG KONG, China -- Asian stocks are failing to respond to the U.S. interest-rate cut on Thursday, with most markets lower as they move into afternoon trading. Japan's Nikkei average ended the morning session down 0.67 percent at 8,893.32, with the broader Topix index down 0.45 percent to 879.29. Korea and Taiwan are both trading in the black. But it's red for the rest of the region, with Hong Kong off half a percent, Australia down more than 1 percent and New Zealand off a similar amount. The U.S. Federal Reserve Board surprised the market on Wednesday when it slashed U.S. interest rates by 0.5 percent, to 1.25 percent for the short-term rate. (Full story) That boosted U.S. stocks, with the Dow Jones industrial average closing up 1.07 percent at 8,771.01 and Nasdaq putting on 1.27 percent. (U.S. roundup) Techs lower in TokyoBut it is Cisco's decision to lower forecasts, delivered after the end of U.S. trade, that is weighing on stocks in Japan.
Techs are generally lower, with chipmaker Mitsubishi Electric down 1.87 percent to 315 yen. Electronics giant Sony Corp. is one of the largest losers, down 3.11 percent to 5,290 yen, after three days of strength. Telecom stocks are also off ahead of NTT DoCoMo's earnings, due later Thursday. DoCoMo is down 0.41 percent at 240,000 yen. Starbucks Japan is down the daily limit at 18,200 yen after its U.S. parent forecast a 500 million yen loss for the year for the subsidiary. The yen is stronger at 121.85 to the U.S. dollar, restoring Wednesday's gains in the dollar after Republicans won control of the Senate in the U.S. midterm elections. Australia questions U.S. strengthIn Sydney, the S&P/ASX 200 index is down 1.18 percent to 3,039.3, with investors figuring the Fed's rate cut signals greater weakness than expected in the U.S. economy.
Media group News Corp. is down 3.57 percent to A$11.87, after a heady 8.7 percent gain Wednesday due to solid first-quarter earnings. (Full story) National Australia Bank is down 4.2 percent to A$32.44 after reporting lower than expected earnings for the year. (Full story) Mining company BHP Billiton is down 1.32 percent to A$9.73 on a weaker global outlook, with Rio Tinto also off. Lion Nathan is up 0.9 percent at A$5.43 on a 20 percent increase in net profit for the year. New Zealand's Top 40 index is down 1.4 percent at 1,956.19, with investors there also questioning the state of the U.S. economy. Hong Kong down despite cutHong Kong's Hang Seng index is down 0.52 percent to 9,723.57, with HSBC off 0.56 percent to HK$88.75 in morning trade. The bank had risen ahead of the rate cut, which the Hong Kong Monetary Authority mimicked with a 0.5 percent cut in the overnight discount rate to 2.75 percent. Cell-phone company China Unicom is up 0.98 percent at HK$5.15, after China Telecom priced its initial public offering at HK$1.48, the bottom of its range. Henderson Land is up 0.98 percent to HK$25.80, rising again after deciding to take its Henderson Investment subsidiary private. Korea up slightlyIn South Korea, the Kospi is up 0.2 percent at 683.94 in early afternoon trade, recovering from a lower open. Samsung Electronics is up 1.17 percent at 173,000 won. Fixed-line phone company KT Corp. is down 1.2 percent to 51,100 won despite doubling its earnings on strong growth in high-speed Internet customers. (Full story) Korean Air Lines is up 2.39 percent to 14,950 won, with investors bidding up companies with overseas debt. Their payments have eased with the U.S. rate cut. Bank stocks are also higher, Kookmin Bank up 2 percent to 43,350 won. Taiwan up on chipsThe Taiex is the strongest performing index in Asia, up 1.01 percent at 4,772.98 on gains in some of its largest techs. Chip foundry UMC is topping the volume with a 4.43 percent hike to T$28.30, with competitor TSMC ahead 0.98 percent to T$51.50. Screenmaker Au Optronics is also moving up, gaining 1.60 percent to T$25.40. Banks stocks, the market's second-largest component, are also forging ahead. Singapore's Straits Times index is down 0.91 percent at 1,434.61, with SingTel slipping 0.71 percent to S$1.40 after posting earnings. (Full story)
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