Hong Kong: Asian stocks rose on Thursday after another Wall Street rally after Fed chief Ben Bernanke said the bank had no timetable to hike interest rates, signalling loose monetary policy would continue.
The news, however, sent the dollar tumbling against the euro although it held up against the yen after Wednesday’s announcement by Standard and Poor’s that it had lowered its outlook on Japan’s sovereign debt.
Tokyo rose 1.28% by the break, Hong Kong added 0.66% in the first few minutes and Sydney gained 0.60%.
Seoul added 0.83% and Shanghai remained flat.
Markets took their lead from Wall Street, where the tech-rich Nasdaq jumped to its highest level since 2000 while the Dow and S&P 500 hit three-year highs after the Fed kept rates at a record low 0-0.25% “for an extended period”.
Bernanke said that level “should essentially remain constant going forward from June”.
The Federal Reserve, citing the economy’s “moderate” recovery, also kept the door open for a wider economic stimulus, while saying its current $600 billion programme would be allowed to run its forecast course through June.
Dealers welcomed the news as evidence that the central bank will continue to support the economy as it recovers from the worst downturn since the Great Depression.
“The comments from Bernanke are very bullish for equity markets, via a weak US dollar, US earnings and commodity prices,” RBS Morgans investment adviser Chris MacDonald in Sydney told Dow Jones Newswires.
The dollar tumbled against the euro, hitting $1.4832 in Asian trade, from $1.4785 late in New York on Wednesday. It jumped more than a cent after the Fed announcement.
The US unit also fell to ¥82.01 from ¥82.15, although the yen was weighed by S&P’s warning the previous day that it could downgrade Japan’s credit rating in light of the huge economic impact of last month’s earthquake-tsunami and nuclear crisis.
The euro rose to ¥121.61 from 121.39.
“The combination of higher interest rates elsewhere in the world, slow US economic growth and a large US budget deficit is causing investors to shun the greenback,” St.George Bank said in a note to clients.
Expectations of continued loose monetary policy sent the greenback down against other Asian currencies.
The Australian dollar hit a fresh 29 year high against the US unit at US$1.0903, while the dollar slipped to 1,071.90 Korean Won, a 32 month low. The British pound hit $1.6638, its highest since December 2009.
The Nikkei posted a second straight gain despite data showing Japanese output fell at a record rate in March due to the earthquake and tsunami that forced companies to shut factories, while household spending also dived.
Gold opened at $1,526.00-$1,527.00 an ounce in Hong Kong, up from Tuesday’s final figure of $1,505.30-$1,506.30, as the weaker dollar made the precious metal an attractive investment.