Asian Stocks Rally on U.S. Rate Cut Hopes

123jump.com Staff
29 Nov, 2007
New York City

Stocks in Japan rallied after comments from the U.S. Fed official reinforced a rate cut expectations at the next meeting on December 11. Rally in financial and export driven stocks lifted Nikkei 225 index higher by 2.4% to 15,513.74. Asian stocks rallied across the region led by a sharp rise in Hong Kong of 4.2% followed by increases of more than 2% in Singapore, Thailand, and in Taiwan.

[R]3:30AM New York, 5:30PM Tokyo – Stocks in Japan rallied reflecting Asia-wide rally in stocks after a U.S. rate cut hope. October industrial production rose 1.6% in Japan.[/R]

Stocks rallied in Japan as investors’ expectations rose for a rate cut in the U.S. at its policy meeting on December 11. The comments from the Fed Vice Chairman suggested that the Fed has to be ‘flexible and pragmatic’ at its next meeting while reviewing interest rate policy.

In Tokyo trading Nikkei 225 rose 2.38% or 359.96 to 15,513.74, while the broader Topix Index climbed 38.83 to 1,514.47.

In the first section of the Tokyo Stock Exchange 9.1 billion shares worth 1.1 trillion yen were traded and in the second section 445 million shares valued at 8.4 billion yen changed hands.

Of the Nikkei 225 shares, 206 gained, 15 declined, and 4 were unchanged. Meiji Dairies led advancers with a surge of 14.26%, largest jump in seven years after it suggested retail price increase of 58 types of dairy products between 3% and 10% in March 2008 The company blamed higher import cost.

Japan''s Ministry of Economy, Trade and Industry said today industrial production increased a seasonally adjusted 1.6% in October from a 1.4% decline in September, buoyed by rising production of semiconductor-making equipment and automobiles.

According to METI the index of output at mines and factories stood at 112.1.

The Federal Reserve Vice Chairman Donald Kohn comments suggested that recent financial markets volatility and economic conditions should be taken into consideration while reviewing interest rate policy. The comments reinforced investors expectations that interest rates are likely to be lowered between 25 and 50 basis points at the next meeting on Dec 11th.

Of the Nikkei 225 index shares, Meiji Dairies led the advancers with a rise of 14.26% followed by rises in Asahi Glass Co of 8.38%, in Tokai Carbon Company of 8.29%, in Nippon Sheet Glass of 7.86%, and in Fujitsu Limited of 7.66%.

Asahi Glass Company and Nippon Sheet Glass surged after the European Union charged the two glassmakers a smaller-than-projected 205 million euros fine for the price fixing.

Nippon Sheet Glass in particular had made a provision of 350 million pounds for the fines.

Exporters and financials climbed as the yen weakened to 110.31 from 108.41 yesterday against the dollar and stocks rallied and expectations that the U.S. rates may be lowered. Canon rose 3.17%, Komatsu climbed 3.93% and Toyota Motor Corporation firmed 3.17%.

Mitsubishi UFJ Financial group rose 6.11%, Mizuho Financial Group gained 4.67% and Mitsui Sumitomo Financial Group firmed 2.30%.

West Japan Railway Co. led decliners, falling 3.04%, followed by declines of 2.06% in Secom Company Limited, 1.77% in Inpex Holdings, 1.07% in East Japan Railway and 0.96% in Shionogi &Company.