Asia stocks rose and the U.S. dollar remained under pressure Wednesday after the Federal Reserve cut rates to a record low, paving the way for regional policymakers to take more aggressive actions to support growth.
Financial stocks rallied after the Fed slashed its key rate to a range of zero to 0.25 percent, and promised to use all available tools to promote growth.
The market was also buoyed by a surge in Goldman Sachs shares after it reported a loss that was as not as dire as some had feared. The U.S. dollar fell against the yen and the euro as the rate cut diminished its yield appeal, while the yield on some U.S. Treasuries plunged to record lows. Oil futures were trading at the $44 a barrel level as economic gloom prompted by weak U.S. data overcame the optimism from the rate cut.
Japan's Nikkei 225 Average climbed 0.5 percent, supported by gains in bank stocks such as Sumitomo Mitsui Financial Group a day after the Federal Reserve slashed borrowing costs to all-time lows. Auto stocks lost ground after Honda Motor cut its full year profit outlook and Nissan Motor cut back output.
Seoul shares ended 0.7 percent higher after volatile trade that cut earlier 3 percent gains as automakers fell on worries about a U.S. auto bailout, but banks rallied across the board after a U.S. Fed rate cut. Hyundai Motor ended down 1.05 percent, but KB Financial Group finished up 6.15 percent.
Australian stocks closed 0.4 percent higher as a hitch with a Commonwealth Bank of Australia equity raising cut short the market's celebration of the Fed interest rate cut.
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Hong Kong shares rose 2.2 percent as property counters were buoyed by Fed rate cuts but HSBC Holdings underperformed on concerns over its exposure to Madoff-related investments and talk of capital raising. Property counters gained strength on hopes that lending rates in the territory would ease. Top developer Sun Hung Kai Properties rose 4 percent while Henderson Land added 7.8 percent.
Singapore's Straits Times Index fell 0.2 percent. Stocks pared gains as investors looked past the Fed's rate cut and continued to mull the impact of the economic downturn on corporate earnings.
China's Shanghai Composite Index rose 0.1 percent, pushed up by steel and non-ferrous metals shares after the U.S. Federal Reserve slashed interest rates, lifting overseas markets.