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Asian markets mixed after Fed's $1.2t plan

(Agencies)
Updated: 2009-03-19 15:29

HONG KONG -- Asian markets were mixed Thursday after the US Federal Reserve announced a $1.2 trillion spending plan to revive growth in the world's largest economy. A jump in the yen hurt Japanese stocks, while Hong Kong's market was flat after surging the day before.

A man watches an electronic stock indicator of a securities firm in Tokyo, Japan, Tuesday, March 17, 2009. [Agencies]

Most of the region's other markets posted small gains amid easing concerns about the banking industry and world economy. Banks again helped lead the way, while commodity firms rose on stronger prices for crude and metals.

Wall Street rose Wednesday after the US central bank moved 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 US 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 scope of Fed's plans could signal US 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 US, and that's bad news for Asia and Asia's exporters," he said.

Lingering anxiety about the US 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, as the Fed's action weighed on the dollar and pulled exporters lower. Hong Kong's Hang Seng was little changed, up 0.1 percent at 13,125.80 in wobbly trade, and South Korea's Kospi edged lower by 0.7 percent to 1,161.81.

Chinese mainland markets were higher, as were benchmarks in Australia, Singapore and Thailand.

Overnight in the US, 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.

US stock index futures were lower, pointing to a lower open on Wall Street Thursday. Dow futures were down 64 points, or 0.9 percent, while S&P futures were down 6.9 points, or 0.9 percent.

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 95.53 yen from nearly 99 yen a day earlier.

Oil prices recovered in Asian trade, with benchmark crude for April delivery up 66 cents at $48.80 a barrel. Overnight, the contract fell $1.02 to settle at $48.14 on a government report showing that US crude and gasoline inventories are bulging with surplus supply.