Hong Kong / Seoul: Asian stocks rose on Wednesday after the Federal Reserve raised US growth forecasts for 2010, while gold struck a record high on a weaker dollar and a report India was open to buying more of the precious metal.
Strong market: People walking past a board showing stock prices in Tokyo on Friday. The Nikkei index ended 0.4% higher on Wednesday. Shizuo Kambayashi / AP
The dollar fell to its lowest in 10 months against the yen and remained under pressure against other major currencies on a combination of factors including expectations that US rates will remain low for some time given a tame inflation outlook.
Asian stock markets held firm, with the MSCI index of Asia Pacific stocks traded outside Japan rising 1.2%. The Thomson Reuters index of regional shares was up 1.5%.
Traders said the upward revision by the Fed in its growth 2010 expectation and minutes of the most recent policy meeting showing officials were increasingly confident about a durable recovery for the US economy helped lift sentiment in Asia.
China led the gain, with the key Shanghai stock index rising 2.07%, rebounding after its steepest slide in three months in the previous session.
Hong Kong and Australian shares rose 0.8% while South Korean stocks ended 0.3% higher with gains in retail and memory chip issues lending support while losses in banking stocks weighed. Shares in Singapore also posted light gains.
India’s main stock index climbed 0.4%. Tokyo stock market’s benchmark Nikkei average ended 0.4% higher after sliding to a four-month intraday low. In addition to recent selling by Japanese pension funds, Tokyo stocks have been under pressure by concerns over the economic outlook as well as the government’s economic and fiscal policies.
Such worries have seen Japanese shares underperform against its regional rivals, with the Nikkei average gaining just 7% so far this year while MSCI index of non-Japanese Asia Pacific stocks has jumped 66% over the same period.
“There is uncertainty about the outlook for corporate revenue in an appreciating yen environment,” Toshiro Muto, chairman of Daiwa Institute of Research and former deputy governor of the Bank of Japan , told a news conference in Hong Kong.
“There is an observation that Japanese banks are strengthening capital procurement. And third, although not the main reason, changes in the Japanese government have created uncertainty about Japanese policies.”