Asian market preview 23/01/2008

US markets fell for 5th day last night following the 2 day losses in global equity markets. The Fed have made a surprise move last night, cutting rate by 0.75% from 4.25% to 3.5% and this has pared Wall St earlier bigger loss in the day. Dow have lost nearly 500 pts before rebounding up and ended the day losing 128.11 pts or 1.06% to 11971.19, S&P500 lost 14.69 pts or 1.11% to 1310.50 while Nasdaq fell 47.75 pts or 2.04% to 2292.27. Financial sectors have rebounded nicely after this action but mixed comments have been said regarding the Fed's surprise bigger-than-expected rate cut overnight. Some said that the Fed have acted much too late to save the economy from going into recession but on the other hand, by doing this, the Fed showed that they can act when it's needed by the market to help the economy. Further action is expected during the Fed's meeting next week. This however is said to be just a temporary relief as housing problems remains and the action will take longer to have any solid impact on the market. Investors need to see solid earnings and growth in the coming months to really make a full recovery for the markets.
Asian markets may open higher today and may rebound from its worst 2-day selloff following the Fed's 75 basis points rate cut overnight. Market volatility may still be high as investors may still be quite nervous and emotions are still flying high in this situation and may dominate the markets instead of rationality and analysis. Crude oil fell overnight, traded recently around $89.10ish per barrel, gold at $890.30 and JPY traded at 106.52. Nikkei futures closed at 13080 in CME overnight, higher than the close of 12540 in Osaka and 12675 in Singapore yesterday.
The Kospi may start the day higher for the 1st time this week and may rebound from its losses in the past 2 days. The Fed's rate cut may bring some positive sentiment into the market but we'll have to see how much confidence will investors get with this move by the Fed. To completely recover from the steep losses in the past 2 weeks, it will take some time and more than just a Fed's rate cut.
Hangseng may open higher following the Fed's rate cut which will bring some temporary relief for some investors and they may want to invest more money into the stock markets in short term. For longer term, it'll need more than just a Fed's rate cut as investors want to see solid earnings and signs that the economy is actually recovering.

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