Asian markets rallied Wednesday after the U.S. Federal Reserve slashed two key interest rates -- the benchmark fed fund rate and the discount rate -- by 50 basis points each. Japan soared 3.7% and South Korea closed 3.5% higher.
The move was a bold bid to shield the world's biggest economy from a housing slump and financial turbulence, raising hopes that Asia's largest export market will be able to ride out turmoil in the credit market.
U.S. crude oil hovered within easy reach of a fresh all-time high of $82.38 set Tuesday as the rate cut eased worries of a sharp slowdown in the world's top
energy consumer.
Bank shares, which had been battered by worries about a global credit shortage stemming from the U.S. subprime mortgage crisis, led gains, further propelled by better-than-expected results from Lehman Brothers . Lehman posted a 3.2% fall in quarterly profits but said the worst of the credit correction was over, sending its shares rocketing 10%. Australia's National Australia Bank, Singapore's DBS Group, South Korea's top lender Kookmin Bank and Japan's Mitsubishi UFG all gained ground.
Japanese stocks surged to a two-week closing high, with the Nikkei 225 Average closing up 3.7% as relief over the Fed decision to slash interest rates set off buying of shares in banks such as Mizuho Trust & Banking. Strong oil prices boosted energy stocks such as INPEX Holdings and trading companies, while high-tech firms also gained.
Seoul shares surged 3.5% to their highest close in six weeks, led by exporters such as LG Electronics as concerns about South Korea's No.2 overseas market lessened.
Australian shares finished 2.6% higher, with miners and financial firms such as Macquarie Bank rallying after the hefty interest rate cut in the U.S. eased worries about the outlook for the world's biggest economy.
Hong Kong shares closed 4% higher in a broad rally that tracked strong global equities, with property stocks leading the way after the Fed's rate cuts. Volume was huge, with CNOOC up as much as 8%, setting a fresh record alongside crude prices, while mainland financials also shone.
Singapore's Straits Times Index was over 3.4% higher at the close, led by gains in banks. DBS Group, United Overseas Bank, and Oversea-Chinese Banking Corp all moved higher.
Chinese stocks slipped to end 0.6% down, bucking the region's positive trend as Shenhua Energy launched a Shanghai initial public offer that is expected to be China's largest, adding to pressure from fresh supply of shares. This drained cash from the market.