By JEREMIAH MARQUEZ
2008-12-16 04:06 PM
The U.S. central bank is widely anticipated to slash its key rate by at least a half-point to 0.5 percent following repeated cuts since the financial crisis erupted last year. However, what the Fed says in its accompanying statement on the health of the world's largest economy, already in recession, and what measures it might take to boost growth will likely have more bearing on investors.
Trading was mostly thin and directionless, though many markets showed some resilience later in the day. In Hong Kong and Shanghai, stocks opened in the red but bounced back modestly after the head of China's central bank said more rate cuts could be in the offing.
"It's very clear the macrodata continue to be nothing but hugely disappointing, but the markets have been able to overcome that because the policy response is coming through," said Daniel McCormack, a strategist for Macquarie Securities in Hong Kong.
Beijing, worried about China's cooling economy, has been rushing out a series of stimulus measures, including massive spending plans and looser fiscal policies.
A host of earnings reports this week was cause for anxiety among many investors. Goldman Sachs Group Inc. is expected Tuesday to report its first quarterly loss since it went public in 1999 as a result of the global financial turmoil. Morgan Stanley reports results on Wednesday.
"The possible cutting of interest rates will help in the short term, but there are too many uncertainties out there," said Peter Lai, investment manager at DBS Vickers in Hong Kong. "We're in a recession ... and people are wondering if other companies may need rescues."
Thailand's key SET index jumped 2.3 percent to 445.99 as investors welcomed Monday's selection of Abhisit Vejjajiva as the country's new prime minister, ending six months of instability caused by anti-government demonstrations that included last month's takeover of Bangkok's two main airports.
Japan's Nikkei 225 stock average fell 96.64 points, or 1.1 percent, to 8,568.02. Australia's benchmark index also declined about 1 percent.
Overnight in New York, U.S. stocks fell back amid investor concerns about the $50 billion fraudulent investment scheme led investment manager Bernard Madoff.
The Dow Jones industrial average finished down 65.15, or 0.75 percent, to 8,564.53. The Standard & Poor's 500 index lost 11.16, or 1.27 percent, to 868.57. European markets also closed lower.
U.S. stock index futures were flat or down slightly. Dow futures were down 10 points, or 0.1 percent, to 8,594, while S&P futures were down 0.5 point to 871.50.
In currencies, the dollar was slightly lower at 90.40 yen. The euro was higher at $1.3702, after peaking in late New York trading at $1.3722, its highest point since Oct. 14.
Oil prices were little changed, trading up 17 cents to $44.68 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract fell overnight $1.77 to settle at $44.51.