Asian Markets Rally, Dollar Gains

123jump.com Staff
18 Mar, 2008
New York City

Asian stock markets rallied tracking large gains in the U.S. stocks. DS&P 500 and Nasdaq surged 4% and Dow Jones added 3.5%. U.S. lowered its benchmark rate by 0.75% to 2.25%, lowest since February 2005. Lehman Brothers and Goldman Sachs reported lower earnings but beat the estimates lifting bank stocks. The surge in financial stocks in the U.S. and Europe is reflected in the Asian markets trading. Banks, brokers, and insurance companies are tradng higher.

[R]9:30PM New York, 11:30AM Sydney – Stocks in Asia rally tracking gains in the U.S. and European markets.[/R]

Stocks in Australia and Japan surged after a sharp rise in indexes in the U.S. ASX 200 index added 3.02% to 5,240 and All Ordinaries rose 2.76% to 5,306.60. ANZ Banking Group soared 6% to A$22.25 and Macquarie Group jumped 12% to A$50.43.

The Federal Reserve Bank in the U.S. cut is benchmark rate by 0.75% to 2.25%,, the lowest since February 2005. In the overnight trading Dow Jones Industrial Average added 3.5% and S&P 500 index rose 4.24%.

Goldman Sachs and Lehman Brothers reported lower earnings but beat the worst expectations of the market. Goldman Sachs reported first quarter revenue decline of 35% to $8.34 billion and net income fell 53% to $1.47 billion. Weaknesses were in investment banking and trading gains using its own capital. Asset management and trading execution revenue edged higher on rising net fund flows.

Lehman Brothers reported a decline in revenue of 31% to $3.5 billion and net income fall of 57% to $489 million. Earnings per share declined to 81 cents from $1.96 a year ago. Steady rise in asset management, equity offering fees and prime brokerage services helped the bank to overcome losses in fixed income related revenues. Lehman has been a subject of intense speculation in the last few days after a sudden demise of Bear Stearns as it lacked liquidity.

Nikkei 225 index in Japan after the first hour of trading jumped 3.2% or 384 to 12,348.68. Financial and banking stocks rise after the U.S. lowered its rate by 0.75% to 2.25%.

Nomura Holdings, Mizuho Financial, and Mitsubishi UFJ Bank led the gainers in Tokyo. Sony, Honda, and Toyota traded higher after dollar rose against yen. The sharp pullback of yen against dollar lifted exporters and base metal and precious metal prices declined in Tokyo trading.

Kospi index in Korea traded 2.3% or 35.97 higher to 1,624.72. Hang Seng Index jumped 300 or 1.4% to 21,384.

The Hong Kong Monetary Authority lowered its benchmark interest rate after the U.S. Fed lowered its rate. The HKMA lowered its base rate by 0.75% to 3.75% to match the decline in the U.S. interest rates.

The Base Rate is the interest rate forming the foundation upon which the Discount Rates for repurchase-agreement transactions through the Discount Window are computed. The Base Rate is currently set at either 150 basis points above the prevailing US federal funds target rate or the average of the five-day moving averages of the overnight and one-month HIBORs, whichever is the higher.