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Markets hang on news of US stimulus

By Jeremiah Marquez | February 10, 2009, Tuesday | Print Edition

WORLD stock markets were mixed yesterday, with Tokyo's index losing more than 1 percent, as a rally fuelled by the US$827 billion plan to help the United States economy ended.

Stocks have advanced lately on expectations that recent US measures will reverse the country's deepest recession in decades by stemming massive job losses and increasing spending.

Treasury Secretary Timothy Geithner's overhaul of the government's US$700 billion financial bailout program also lifted sentiment in the markets.

Yet most markets in Asia gave up some of their gains by yesterday afternoon. Analysts say much of the rise has been fueled by investors looking to capitalize on the markets' momentum, not a fundamental shift in sentiment.

"I don't think this rally will last," said Desmond Tjiang, who helps manage US$4 billion in Asian equities at Fortis Investment Management.

"There's still bad macro news and bad corporate news that will outweigh the stimulus hopes in the near term," he said. "After the stimulus package, what other good news can there be?"

Japan's Nikkei 225 stock average fell 107.59, or 1.3 percent, to 7969.03, while South Korea's Kospi was off 0.6 percent at 1,202.69. Singapore and New Zealand stock markets also lost ground. But stock measures in Australia and India were higher.

European markets started sliding when they opened yesterday.

In the US on Friday, investors looked past abysmal news about the country's job market and instead hoped it would increase pressure on law makers to pass the stimulus bill. But Wall Street futures sank yesterday, suggesting that US markets would shed some of last week's gain.

Recent gains in commodities prices boosted raw materials producers and the shipping firms that transport their goods. Australia's BHP Billiton Ltd, the world's largest mining company, gained 3.4 percent.

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