Oct. 9, 2008
Rate Cuts Calm Nervous Stock Markets
Asian Bourses Largely Steady After Day Of Emergency Moves, European Exchanges Up
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A South Korean investor watches an electronic stock board at the Korea Stock Exchange in Seoul, South Korea, Oct. 9, 2008. (AP Photo/Ahn Young-joon)
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Play CBS Video Video Recession Predicted For U.S. A major slowdown is predicted for the world's economy and an outright recession in the United States, according to a report by the International Monetary Fund. Anthony Mason reports.
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Video World Markets Slash Rates Interest rates have been reduced dramatically across many major financial markets, as authorities scramble to halt a potentially devastating economic disaster. Charlie D'Agata reports from London.
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Video U.K. Banks Get Bailout The hint of a Fed rate cut did nothing to stop the pain in U.S. markets while the U.K. decided to bailout its banks, reports Richard Roth. Maggie Rodriguez talks to Fox Business News' Alexis Glick.
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Timeline Financial Meltdown Track major events that lead to one of the most tumultuous times in Wall Street's history.
South Korea, Hong Kong and Taiwan lowered their interest rates, joining a series of cuts Wednesday in the U.S., Europe and China aimed at stabilizing global markets that have plunged sharply this week.
But lower interest rates alone are unlikely to cure the crisis in confidence, analysts said.
"Short-term selling pressure is still strong," said Lorraine Tan, director at Standard & Poor's equity research in Singapore. "I don't think interest rate cuts alone are going to help improve confidence all that much."
Investor reaction in Asia to the string of moves mirrored that in the U.S. and Europe on Wednesday: an initial recovery in several markets faded amid deep concerns about the depth of the crisis.
Tokyo's benchmark Nikkei 225 index rose more than 1 percent but fell back to close down 0.5 percent to 9,157.49, a five-year low. That followed a 9.4 percent plunge Wednesday, its biggest one-day drop since the 1987 market crash.
Hong Kong's Hang Seng index was up 2.1 percent in late afternoon trading at 15,779, and South Korea's key index rose 0.6 percent after earlier rising as much as 2.9 percent.
Mainland China's main index fell 0.8 percent after its central bank lowered rates Wednesday evening.
China's move came as six other central banks, including the U.S. Federal Reserve and European Central Bank, joined to lower rates to contain the spreading financial crisis. Japan's central bank, constrained by already-low rates, said it backed the moves.
Europe's biggest exchanges were up in early trading Thursday, with London's FTSE, the German DAX and France's CAC all showing about a 2 percent gain before midday.
On Wall Street, the Dow Jones industrial average ended a volatile session down 2 percent - disappointing, but a milder decline than in previous days.
Wavering investors in the U.S. were shaken by U.S. Treasury Secretary Henry Paulson's comment Wednesday that it would be several weeks before the government's $700 billion financial rescue package makes its first purchases of banks' troubled mortgage-backed assets.
"The financial institutions are having an anxiety attack," Stuart Hoffman, an economist at PNC Financial, told CBS News. "In and of itself [the rate cut] won't be enough, but it's part of a lot of stuff the Fed has thrown on the wall to see what sticks."
Late on Wednesday, an administration official told the Associated Press the Bush White House is considering taking ownership stakes in certain U.S. banks as an option for dealing with a severe global credit crisis.
The official, who spoke on condition of anonymity because no decision had been made, said the $700 billion rescue package passed by Congress last week allows the Treasury Department to inject fresh capital into financial institutions and get ownership shares in return.
A decision to inject capital directly into financial institutions in return for ownership stakes would be similar to a plan announced Wednesday by Britain.
Joining the worldwide efforts to ease the crisis, Taiwan's Central Bank reduced its key interest rate for the second time in two weeks. The Taiwan share benchmark nonetheless fell 1.5 percent, to 5,130.71.
"Our economy has come under pressure for a slowdown," Governor Perng Fai-nan said. "We hope the rate cut can stimulate consumption to spur economic growth."
In Indonesia, trading on the Jakarta Stock Exchange was canceled Thursday after the benchmark JSX index sank 10.4 percent Wednesday before trading was suspended by late morning. Authorities ordered the market to stay closed, possibly through Friday, following a late night Cabinet meeting.
© MMVIII, CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.
Best-selling author Mitch Albom on his first nonfiction work since "Tuesdays with Morrie."
McCain and Palin have NO plan for the economy and NO plan to end the war in Iraq. McCain and Palin are no different then Bush and Cheney. A Republican is a Republican. I don''t trust McCain and Palin.
VOTE FOR BARACK OBAMA AND LETS GET A DEMOCRAT WIN IN NOVEMBER!
I know that they lend money out but there are many other banks out there supposedly doing ok, has this been deliberate done and allowed so as to make all banks into a world bank or controlled by those who think that they are big, the world controllers??? Will the powers to be now come along and tell us that they will help the world out and put all into one or two banks... just a thought..
What next guys?