Asian stocks higher on Fed rate cut US banks earnings

Stock markets across Asia rose Wednesday after the Federal Reserve's interest rate cut and forecast-beating results for US investment banks eased worries about the worsening global credit crisis.

Banks across the region posted huge gains after Goldman Sachs (NYSE:GS) and Lehman Brothers (NYSE:LEH) reported quarterly profits that were above analyst expectations, comforting investors who feared that the credit turmoil would deepen.

Exporters rallied in Tokyo after the US dollar strengthened against the yen, aiding their profit margins.

The Fed cut its benchmark fed funds rate by 75 basis points to 2.25 percent overnight, the lowest level since December 2004, and in the accompanying statement it signaled that it is prepared to make further cuts if needed.

'The interest rate cut in the US was less than expected but at least it lends some extra firepower,' said Ric Klusman, head of institutional trading at Aequs Securities in Sydney.

'The market is moving predominantly on Lehman. Everyone thought it was going broke this week,' he said.

The main Australian indexes rose the most, with the S&P/ASX 200 gaining 3.4 percent at 5,258.5 and All Ordinaries up 3.1 percent at 5,323.7 after banks such as National Australia Bank (OOTC:NABZY) and ANZ Banking Group surged.

Japan's Nikkei 225 Stock Average jumped 2.8 percent to 12,292.73 and the broader Topix rose 3 percent to 1,198.67.

Hong Kong's Hang Seng Index climbed 2.7 percent to 21,968.42, shrugging off the impact of the recent monetary tightening measures in China.

Beijing has moved to curb growth in credit by raising banks' reserve requirement to 15.5 percent, the highest on record, from March 25.

The Hong Kong Monetary Authority lowered its base interest rate by 75 basis points to 3.75 percent this morning, matching the Fed's move.

South Korea's KOSPI was up 2.4 percent at 1,626.74 and Singapore's Straits Times Index 1.5 percent higher at 2,833.58. The Philippine composite index was up 1.3 percent at 2,812.91 and the Indonesian composite index gained 2.1 percent at 2,389.99.

Banks rally

Lehman Brothers and Goldman Sachs posted quarterly profits early Tuesday that were significantly lower than they were a year before, but higher than analysts predicted, comforting fearful investors who were apprehensive that more investment banks would suffer the same fate as Bear Stearns. (NYSE:BSC)

In response, the Dow Jones Industrial Average soared 420 points, its biggest one-day point gain in more than five years.

The Fed cut its key interest rate by three-quarters of a percentage point in an attempt to shore up the economy and confidence in the credit markets.

Banks across the Asia-Pacific region rallied.

In Sydney, National Australia Bank was up 1.43 dollars or 5.2 percent at 29.17 Australian dollars and ANZ Banking Group rose 1.22 dollars or 5.8 percent to 22.22 dollars. Commonwealth Bank of Australia was up 1.73 dollars or 4.6 percent at 39.30 dollars and Westpac Banking (NYSE:WBK) was 1.27 dollars or 5.6 percent higher at 23.75 dollars.

Australia's leading investment bank, Macquarie Group (OOTC:MCQEF) , surged 4.48 dollars or 9.9 percent to 49.55 dollars, while its second-largest, Babcock & Brown (OOTC:BBNLF) , added 98 cents or 7.7 percent at 13.68 dollars.

In Japan, Mizuho Financial rose 13,000 yen or 3.5 percent to 384,000, Mitsubishi UFJ Financial gained 44 yen or 4.3 percent at 844 and Sumitomo Mitsui Financial (OOTC:SMFJY) rose 33,000 yen or 5.1 percent to 679,000.

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Asian stocks higher on Fed rate cut US banks earnings