Hong Kong: Asia stocks edged up on Wednesday as reassuring comments from Federal Reserve chairman Ben Bernanke sparked a rebound in battered financial shares, while the yen slid further on Japan’s mounting economic and political troubles.
Safe-haven government bonds retreated as investors shifted funds into riskier assets, while gold steadied after having soared in the past few weeks on mounting fears about the financial health of countries trying to contain the crisis.
Bernanke said the government did not have plans to nationalise major banks at this stage, remarks that put to ease some worries that the largest US banks may need to be taken over because of huge hits to their balance sheets from the global credit crisis.
The yen hit a three-month low beyond 97 to the dollar as investors have turned against Japan on the country’s deepening recession that is the worst among major economies, forcing hedge funds and other market players to unwind bets favouring the yen.
Data showed Japanese exports plunged a record 45.7% in January from the previous year, pointing to another sharp contract in economic activity in the first quarter of the year.
But Japanese shares were helped in part by reports that the government may start directly buying stocks to support the market and ease the strain on the country’s big banks, whose large equity portfolios have suffered heavy losses.
“It’s good news, but what the market really wants is large-scale economic measures with the Japanese economy having deteriorated the most among developed countries,” said Takahiko Murai, general manager of equities at Nozomi Securities in Tokyo.
Japan’s Nikkei average climbed 1.2%, holding off a 26-year low struck last October. The MSCI index of Asia-Pacific shares outside Japan was up 1% after hitting a three-month low earlier in the week.
The gains lagged a 4% jump in the US S&P 500 on a surge in financial shares.
Investors showed little reaction to US President Barack Obama saying he has identified $2 trillion in costs that can be cut over the next decade as he seeks to offset big fiscal spending aimed at reviving the economy.
Analysts said there were also technical reasons for the gains in stocks and yen slide.
The S&P 500 has held above its intraday lows touched last November that suggested the near-term downside may be limited, while the yen’s fall took its through chart levels that spurred further selling.
The dollar climbed along with most major currencies against the beleaguered yen. The dollar struck a three-month peak of 97.20 before slipping back to ¥96.95 up 0.3% on the day.
Gold was up $1.85 an ounce at $964.05 but has retreated from 11-month highs above $1,000 hit last week as some safe-haven buying has ebbed and investors booked profits.
Oil was little changed at $39.93 a barrel after climbing 4% the previous day along with the rebound in equity markets.