Asian stocks opened negative on Wednesday (Dec. 12, 2007), as a cut of 25 basis points by the Fed Reserve was below expectations. Investors further lost confidence after the Federal Reserve said that U.S. economic growth was slowing down and also after Morgan Stanley said that Japan may enter a recession.
The cut in the federal funds rate is the third in the past three months by the world`s most powerful central bank. Fed officials signalled that further cuts were possible if the downturn in housing and the crisis in mortgage lending were to get worse.
According to the press release issued by US Federal Reserve, readings on core inflation have improved modestly this year, but elevated energy and commodity prices, among other factors, may put upward pressure on inflation
Mitsubishi UFJ Financial Group fell on speculation that a quarter-point interest-rate cut by the Fed yesterday won`t be enough to halt credit-market losses. Samsung Electronics and BHP Billiton declined on concern that demand for electronics and raw materials will slump in Asia`s largest export market.
The Japanese benchmark index Nikkei declined 294.85 points, or 1.84%, to trade at 15,749.87.
Hong Kong`s index Hang Seng fell 781.67 points, or 2.67%, to trade at 28,445.17.
China`s Shanghai Composite declined 90.54 points, or 1.75%, to trade at 5,084.54
Taiwan`s index Taiex fell 181.97 points, or 2.11%, to trade at 8,456.36.
South Korea`s KOSPI declined 22.87 points, or 1.19%, to trade at 1,902.20.
Singapore`s Straits Times fell 66.63 points, or 1.86%, to trade at 3,522.40.
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