Asia markets mixed after Fed's $1.2 trillion plan
By JEREMIAH MARQUEZ – 45 minutes ago
HONG KONG (AP) — Asian stock markets were mixed Thursday as investors digested the U.S. Federal Reserve's massive $1.2 trillion spending plan to revive growth in the world's largest economy. Japanese exporters got whacked as the dollar tumbled against the yen.
Most of the region's other markets posted small gains, buoyed after Wall Street gained for a sixth time in seven days on optimism over the Fed's announcement. Banks in several markets helped lead the way, while commodity firms rose on stronger prices for crude and metals.
The U.S. central bank announced Wednesday it would to pump more than $1 trillion into the economy with plans to buy up to $300 billion long-term government bonds and some $750 billion in mortgage-backed securities, which would help revive the country's sagging housing market.
The measures — aimed at propping up demand and spending in the U.S. by driving down borrowing costs for consumers and companies alike — stunned investors around the world. The Fed hasn't set out to influence long-term interest rates by buying long-term bonds since the 1960s.
But while anything to support Western demand might help Asia's export-reliant economies, analysts worried the ambitious scope of the Fed's plans could signal the U.S. economic prospects are even worse that originally thought.
"I think the desperate measures are a reflection of desperate times," said Ben Pedley, Hong Kong-based managing director of LGT Investment Management Ltd., part of fund manager that oversees some $18 billion.
"The fact that the Fed is taking these extraordinary measures may actually be a sign of just how bad things are to come in the U.S., and that's bad news for Asia and Asia's exporters," he said.
Lingering anxiety about the U.S. economy and the central bank's plan was underscored in three of Asia's leading markets.
In Tokyo, the Nikkei 225 stock average lost 26.21 points, or 0.3 percent, to 7,945.96 as the Fed's action weighed on the dollar and pulled back exporters like Toyota and Honda. Hong Kong's Hang Seng dropped 74.43, or 0.6 percent, to 13,042.74, in up-and-down trade, and South Korea's Kospi edged lower by 0.7 percent to 1,161.81.
Mainland China's market was higher, as were benchmarks in Australia, Singapore, Malaysia and Thailand.
Among Japan's giant exporters, Honda Motor shed 3 percent, Toyota was off 2.2 percent and Sony lost almost 1 percent as the dollar fell below 96 yen, down from nearly 99 yen the day before. A stronger yen erodes exporters' foreign income.
The dollar slid against the yen as investors bet the Fed's plan would expand dramatically the money supply and lead to inflation. The greenback fell to 95.57 yen. The euro was lower at $1.3435.
In Hong Kong, shares of Chinese juice maker Huiyuan Juice Group Ltd. tanked 43 percent after regulators rejected Coca-Cola Co.'s $2.5 billion bid for the company. HSBC Holdings PLC, Europe's biggest bank, shed 4.3 percent after launching its rights issue this week to raise capital.
On Wednesday, the Dow Jones industrial average rose 90.88, or 1.2 percent, to 7,486.58. The Standard & Poor's 500 index added 16.23, or 2.1 percent, to 794.35, and the Nasdaq composite index rose 29.11, or 2 percent, to 1,491.22.
U.S. stock index futures were lower, pointing to a lower open on Wall Street Thursday. Dow futures were down 40 points, or 0.5 percent, while S&P futures were down 5.9 points, or 0.8 percent.
Oil prices recovered in Asian trade, with benchmark crude for April delivery up 76 cents at $48.90 a barrel. On Wednesday, the contract fell $1.02 to settle at $48.14 on a government report showing that U.S. crude and gasoline inventories are bulging with surplus supply.
