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| Asian markets rise on US rate cut | Asian markets rise on US rate cut |
| (30 minutes later) | |
| Asian markets have risen sharply after the US Federal Reserve cut interest rates for the first time in four years. | Asian markets have risen sharply after the US Federal Reserve cut interest rates for the first time in four years. |
| Japan's Nikkei index added 3.4% in late afternoon trading while Hong Kong's Hang Seng index climbed 3.8%. | Japan's Nikkei index added 3.4% in late afternoon trading while Hong Kong's Hang Seng index climbed 3.8%. |
| The Fed cut its benchmark federal funds rate from 5.25% to 4.75%, sending US shares up sharply. | The Fed cut its benchmark federal funds rate from 5.25% to 4.75%, sending US shares up sharply. |
| Analysts had expected a cut to prevent a housing market downturn and the credit crunch from denting the economy, but the size of the cut surprised many. | Analysts had expected a cut to prevent a housing market downturn and the credit crunch from denting the economy, but the size of the cut surprised many. |
| Some analysts had also wanted the Fed to leave rates on hold to focus on controlling inflation, arguing that a cut would lead to the "cheap money" conditions that had brought boom-and-bust to the property sector in the first place. | Some analysts had also wanted the Fed to leave rates on hold to focus on controlling inflation, arguing that a cut would lead to the "cheap money" conditions that had brought boom-and-bust to the property sector in the first place. |
| One-off? | One-off? |
| The tightening of credit conditions has the potential to intensify the housing (market) correction and to restrain economic growth more generally US Federal Reserve href="either url here">Fed cuts US rates class="" href="/1/hi/business/7002123.stm">Japan keeps rates on hold | |
| Japanese investors carefully watch the US economy because it is Japan's biggest export market. | Japanese investors carefully watch the US economy because it is Japan's biggest export market. |
| Concerns that recent woes in the US mortgage market may hit US economic growth have depressed Japanese share prices. | Concerns that recent woes in the US mortgage market may hit US economic growth have depressed Japanese share prices. |
| In Tokyo, where Japan's central bank kept interest rates on hold on Wednesday, the Nikkei was up 536.86 points at 16,337.86, though had lost some of the momentum seen in morning trading. | In Tokyo, where Japan's central bank kept interest rates on hold on Wednesday, the Nikkei was up 536.86 points at 16,337.86, though had lost some of the momentum seen in morning trading. |
| "The market is now watching to see if Wall Street rallies again, or if yesterday's moves were a one-off thing, with attention on brokerage earnings results," said Yutaka Miura, a senior technical analyst at Shinko Securities. | "The market is now watching to see if Wall Street rallies again, or if yesterday's moves were a one-off thing, with attention on brokerage earnings results," said Yutaka Miura, a senior technical analyst at Shinko Securities. |
| By cutting rates the Fed would be boosting the US economy by making it cheaper to borrow money Send us your comments Q&A: What the rate cut means | |
| The Hang Seng index closed the morning up 928.45 points at 25,505.30, having earlier hit an all-time high of 25,515.44 | The Hang Seng index closed the morning up 928.45 points at 25,505.30, having earlier hit an all-time high of 25,515.44 |
| US shares had also performed well after the Fed's move | US shares had also performed well after the Fed's move |
| By the close of trade, the Dow Jones industrial average was up 2.51% at 13 739.39, the S&P 500 Index added 2.92% to 1,519.78 and the Nasdaq gained 2.71% to 2,651.66. | By the close of trade, the Dow Jones industrial average was up 2.51% at 13 739.39, the S&P 500 Index added 2.92% to 1,519.78 and the Nasdaq gained 2.71% to 2,651.66. |
| It was the S&P 500's biggest percentage gain since March 2003, and Dow Jones average's best one-day percentage gain since 2003. | It was the S&P 500's biggest percentage gain since March 2003, and Dow Jones average's best one-day percentage gain since 2003. |