Stocks mixed; traders edgy after rate cuts


HONG KONG — Asian stocks were mixed Thursday as investors remained cautious about the global economy after a series of interest rate cuts by some of the world’s major central banks tried to revive confidence. Hong Kong, South Korea and Taiwan all reduced borrowing costs, a day after central banks in the United States, Canada and Europe announced simultaneous cuts, followed soon afterwards by China. Tokyo slipped 0.5 percent — to a five-year low — following a rollercoaster session a day the index slipped more than nine percent, its worst single day drop in 21 years. Sydney lost 1.5 percent, Taipei shed 1.45 percent and Shanghai was almost one percent off. However, traders in Hong Kong took heart from the rate cuts with the Hang Seng Index rising 3.3 percent a day after plunging 8.2 percent, while Singapore added 3.4 percent. Seoul was also boosted, rising 0.6 percent. Earlier in the day Taiwan and South Korea cut their rates by 25 basis points, while Hong Kong took another 0.5 percentage point off its lending costs. China made a 27 basis point reduction Wednesday. Australia’s central bank cut its rate by one percentage point on Tuesday in a bid to put ease the worst global financial crisis since the Great Depression. “While rate cuts may not address the root cause of the problem, they do help the real economy and indirectly assist bank recapitalization,” said analysts at UBS.

Although the Bank of Japan did not lower its interest rates — already at just 0.5 percent — it did inject 4.0 trillion yen (US$40 billion) into the market, the biggest one-day injection since the crisis began. Fears that Japan is on the brink of recession were raised also, when figures showed core machinery orders, a key gauge of corporate capital spending, slumped 14.5 percent in August from the previous month. The figure represents the fastest drop in more than two years.