Asian stocks retreat with Wall Street as Fed rate cut disappoints

Asian stocks retreat with Wall Street as Fed rate cut disappoints

	Published : Wed, 12 Dec 2007 04:32 By : Agencies Print this Story

HONG KONG (Thomson Financial) - Stock markets across Asia retreated Wednesday with benchmarks in Hong Kong shedding more than 2 percent as investors digested the latest Federal Reserve decision to cut interest rates by just a quarter point, disappointing the market and sending Wall Street plunging overnight.

The Hang Seng was last down 712.13 points or 2.4 percent at 28,514.71, with banks and property companies leading the decline.

'It seems that investors want the Fed to solve all the ills of the US economy with one shot,' said Benjamin Collett, head of hedge fund sales trading at Daiwa Securities Co in Hong Kong.

'Some sectors want the Fed to support the economy much more aggressively,' he said.

Chinese stocks listed in Hong Kong also fell as the mainland's inflation rate hit an 11-year high, strengthening the case for further credit tightening in the world's fastest-growing economy.

China Shipping Container Lines (CSCL), Asia's second-biggest container line, tumbled 37 cents or 5.6 percent to 6.05 Hong Kong dollars.

Investors ignored its strong debut in Shanghai today, where its shares traded up 60 percent at opening bell. The stock rose further and was last trading at 10.77 yuan, up 63 percent from its offer price of 6.62 yuan.

The Shanghai Composite index lost 1.7 percent to 5,087.66 in line with the region.

Overnight, the major US indexes closed lower with the Dow Jones Industrial Average losing 294.26, or 2.14 percent, to 13,432.77 after dropping as much as 313.29.

Broader indexes also fell. The Standard & Poor's 500 index fell 38.31, or 2.53 percent, to 1,477.65, and the Nasdaq composite index fell 66.60, or 2.45 percent, to 2,652.35.

Wall Street plunged Tuesday after the Fed lowered interest rates by a quarter point, disappointing investors who hoped the central bank would move more aggressively to help the economy overcome the credit and mortgage crisis.

Investors had been expecting policymakers would lower rates for a third straight time, though there was debate over the size of the cut. Most economists anticipated a quarter-point reduction in the benchmark federal funds rate to 4.25 percent, but some investors were hoping for a half-point cut from the Fed's final meeting this year and their disappointment took the market sharply lower.

In Tokyo, the Nikkei was down 1.8 percent at 15,749.87 and the broader Topix index down 1.7 percent at 1,540.60, with exporters under fresh pressure from a strengthening of the yen.

The dollar was last quoted at 110.85 yen, after slipping to 110.62 yen late Tuesday as investors unwound yen-funded carry trades.

Sony Corp was 90 yen or 1.5 percent lower at 6,140, Canon was down 170 yen or 2.9 percent at 5,670 and Toyota Motor declined 120 yen or 1.9 percent to 6,240.

Among banks, Mizuho Financial Group was down 18,000 yen or 2.8 percent at 617,000, Sumitomo Mitsui Financial Group down 25,000 yen or 2.6 percent at 935,000 and Mitsubishi UFJ Financial Group down 22 yen or 1.8 percent at 1,206.

Positive economic indicators released by Japan's Ministry of Finance failed to lift market mood.

Before the opening bell, the ministry said the current account surplus rose 45.7 percent to 2.229 trillion yen in October from a year earlier, buoyed by brisk exports to the EU and Asia. The figure was above market expectations. Economists were looking for a surplus of 2.070 trillion yen

In Australia, the S&P/ASX200 was down 1.1 percent at 6,606.1 and the All Ordinaries down 1.1 percent at 6,667.0.

Index leader BHP Billiton was down 93 cents or 2.1 percent at 43.27 Australian dollars while Rio Tinto was down 3.60 dollars or 2.5 percent at 142.90 dollars.

Oil and gas stocks were higher following an overnight rise in crude oil prices with sector leader Woodside Petroleum up 29 cents or 0.6 percent at 47.68 dollars and second-ranked Santos up 35 cents or 2.5 percent at 14.65 dollars.

'There was a bit of an overreaction so we are seeing some buying come back into the market,' said Ric Klusman, head of institutional trading at Aequs Securities.

Elsewhere in the region, South Korea's KOSPI was down 1.5 percent at 1,895.57.

The Singapore Straits Times index was down 1.9 percent at 3,522.54 while the Jakarta index was down 0.7 percent at 2,790.29.

Malaysia's KLCI was down 0.9 percent at 1,420.6 and the Philippine Composite index was last down 54.57 points or 1.5 percent at 3,617.81.

leonora.walet@thomson.com

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