Most Foreign Markets Follow U.S. Higher on Fed Move

Surprised by the speed and size of the U.S. interest rate cut Wednesday, traders pushed many Asian stocks higher early today--but their enthusiasm was tempered by worries it will take time for lower rates to help the global economy.

Tokyo blue chips finished with a loss after surrendering an early gain of 1.4%. The 225-issue Nikkei index fell 0.7% to close at 13,691.49 in an abbreviated post-holiday session.

Analysts said Japanese economic prospects remain cloudy, adding that lower interest rates in America--intended to prevent a recession--won’t instantly provide tangible benefits elsewhere.

“Overall, the growth picture is not that strong, and although the U.S. rate cut is going to help, it’s just very early days in that process,” said Peter Morgan, economist at HSBC Securities Ltd.

But other Asian markets rallied sharply. Hong Kong’s Hang Seng index was up 674.54 points, or 4.6%, to 15,264.12 in late trading. Hong Kong’s monetary authority cut its overnight interest rates by half a point early today, matching the U.S. Federal Reserve’s move as it typically does.

The South Korean market was the biggest winner in early dealings, with Seoul blue chips up by 8% in the afternoon.

“This is good news for South Koreans because we depend heavily on the U.S. markets for exports,” said Kim Sung-joo, an analyst at Daewoo Securities Co. in Seoul. “This will in turn ease fears that our economy will begin slowing down in the first half of this year.

“The U.S. interest rate cut also means that it will become easier for South Korean companies to borrow money overseas,” Kim said.

Elsewhere, Taiwan’s main share index jumped 5.1% and Singapore’s rose 3.1%. The Thai market leaped 7.1%, and Australia’s main share index gained 1.7%.

In Manila prices rose 1.3% in early dealings, with lower interest rates providing much-needed hope for relief in a market where stock prices and the peso have been hit hard by uncertainties surrounding the impeachment trial of President Joseph Estrada on corruption charges.

On Wednesday, Latin American markets soared with the U.S. market after the Fed’s midday interest rate cut.

The main Mexican share index zoomed 5.4%, Brazil’s market soared 7.6% and Argentina’s market jumped 7.2%.

Those markets, like the majority of global stock markets, had fallen in 2000, battered in part by worries about the U.S. economy. The Mexican market fell 21% in local currency terms last year, while Brazil fell 10.7% and Argentina slumped 24.3%.

Many Asian markets had fared much worse. The South Korean market dived 50.9% in 2000 and Taiwan slumped 43.9%.