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Fed set to halve rates; Japan, China may act too
(Agencies)
Updated: 2008-12-16 15:09
"While an additional rate cut by the Fed is widely expected, market reaction to the cut is still very much uncertain, as another cut means the Fed is left with one less card to offer," said Lim Tae-gun, an analyst at Daewoo Securities in Seoul. Tokyo's Nikkei Average was down 0.9 percent, though shares in Seoul edged up, as carmakers gained on hopes the White House will engineer a rescue for the troubled "Big Three" carmakers. US Car Makers Struggle President George W. Bush on Monday dashed hopes that the White House would quickly announce an alternative plan to the US$14 billion bailout killed in the US Senate on Friday. But sources said later the Bush administration could approve an automaker bailout from its bank rescue fund as early as Wednesday. Investors fear that the domino effect of the collapse of US carmakers would hit companies all along the supply chain, wiping out millions of jobs in the United States and around the world and dealing another body blow to the struggling industry. US, Japanese, German and French carmakers have been slashing earning forecasts and jobs in the face of a slump in world wide demand. Japan's Toyota Motor Corp, the world's biggest auto maker, said weaker demand had prompted it to suspect a project with truck maker Isuzu Motors to develop diesel engines and the Nikkei reported it was pushing for cheaper steel prices from supplier Nippon Steel Corp. On Monday, Toyota said it was putting on hold indefinitely work on a new car plant in the United States. There was no reprieve for banks either. The industry, whose heavy losses from toxic US housing debt set off the spiral of financial turmoil that escalated into a full-blown global economic downturn, made headlines again due to several banks' exposure to an alleged $50 billion Wall Street fraud by investor Bernard Madoff. Among those affected were Britain's HSBC Holdings Plc, Royal Bank of Scotland and Man Group, Japan's Nomura Holdings and France's Natixis SA. No major US banks have said they were exposed, but the Madoff scandal did take a toll on US stocks along with worries about bank profits.
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