Fed Hopes Lift Asia Stocks, Japan Climbs
Asian stocks closed mostly higher Tuesday after Monday's selloff as battered financials regained some luster ahead of a Federal Reserve meeting that is expected to yield steep U.S. rate cuts. Japan finished 1.5 percent higher, but Australia closed flat.
Chinese stocks were the only exception, closing nearly 4 percent down because of pressure from possible monetary tightening.
Monday's markets slumped after the Fed's unexpected cut in a key lending rate and the bargain sale of U.S. investment bank BearStearns to JPMorgan Chase sparked fears of a deepening global credit crisis. Concern about financial market contagion and a U.S. economy that is already believed by some economists to be in recession is likely to weigh heavily on Fed policymakers later Tuesday when they gather to decide on U.S. interest rates.
Japan's Nikkei 225 Average closed 1.5 percent higher, snapping a three-day losing streak despite lingering concerns about a stronger yen, as investors picked
up beaten-down shares such as Canon after the previous day's market selloff.
South Korea's KOSPI closed 0.9 percent higher, ending three days of falls, buoyed by a rise in technology shares, although financials remained under a cloud on concerns of continuing credit-crisis fallout. Samsung Electronics and LG Display advanced. Financial titles remained in negative territory, with Kookmin Bank, down 7 percent, its lowest since July, 2005 as investors questioned the timing of its purchase of a major stake in a Kazakh bank.
Australian shares ended virtually unchanged, weighed down by losses in miners following a drop in metal prices, though banking shares recovered as investors sought bargains after recent hefty falls. The banking sector was also buoyed by hopes that domestic interest rates would stay put for a while after minutes from the Reserve Bank of Australia's latest policy meeting showed that the central bank has noted tentative signs of a slowdown in demand.
Hong Kong stocks closed 1.4 percent up after spending most of the day in the red. Investors focused on concerns that Lehman Brothers could face similar credit problems to those that hit Bear Stearns, and the morning selloff came before investment bank Goldman Sachs is due to report its earnings later in the day.
Singapore's Straits Times Index also closed 1.4 percent higher.
China's Shanghai Composite Index fell as already weak market sentiment was dampened further by talk of monetary tightening. Chinese Premier Wen Jiabao said it would not be easy to achieve a 4.8 percent inflation target for 2008 during his annual news conference following the closing session of the National People's Congress.