Asia gripped by volatility after Fed rate cut

Wednesday, January 30, 2008

Japanese, Australian and South Korean shares rose after opening on a weak note, while Hong Kong shares gave up early gains as investors considered negative news flows related to the health of the global financial markets and the recent correction in Shanghai-listed stocks.
"It is a real mad mess at the moment here," said Michael Heffernan, senior client adviser at Austock Stockbroking in Melbourne.
"When the dust settles, people are going to see that interest rates in the U.S. are now at 3% and not at 5.25%, where they were months ago. It has got to be very positive ... But the initial reaction here is disappointment (about the overnight fall on Wall Street) tinged with excitement," he added.
Chart of JP:1804610
Japan's Nikkei 225 average rose 0.6% to 13,417.98 at the end of a volatile morning session, during which it dropped as low as 13,154.77. The broader Topix index gained 0.7% at 1,328.88.
In Hong Kong, the Hang Seng Index fell 1.6% to 23,270.71 after rising as high as 23,887.17 in the opening minutes. The Hang Seng China Enterprises index fell 2.7% at 12,410.12.
"I think the mood of the market is one of caution. There are too many uncertainties on the state of the U.S. economy and a lot of people just don't want to stick their necks out," said Howard Gorges, vice chairman at South China Brokerages in Hong Kong.
"We're just in one of those phases when it's hard to call the markets. People prefer to be defensive. If there's a sharp fall, buyers want to come in but they don't want to chase it up," he added.
China's Shanghai Composite rose as high as 4,487.32 during the session, but couldn't sustain the gains in the wake of brutal weather conditions in south and central China, where tens of millions of people were affected by the worst winter the country has faced in five decades. The index was recently up 0.6% at 4,442.11.
Australia's S&P/ASX 200 dropped 0.1% to 5,612.20, after wavering between 5,448.50 and 5,655.50 during the session. South Korea's Kospi jumped 1% to 1,606.29, bouncing off the day's low at 1,570.87, New Zealand's NZX 50 index dropped 0.5% to 3,679.56 and Taiwan's Weighted index fell 1.2% to 7,450.23