Asian stocks soar on Federal Reserve speculation

Asian stocks soar on Federal Reserve speculation
Comment E-mail Print Share
First Published: Wed, Oct 06 2010. 08 57 AM IST
Updated: Wed, Oct 06 2010. 08 57 AM IST
By AP
Tokyo: Asian stock markets rose Wednesday, buoyed by growing expectations that the US Federal Reserve will take steps to bolster the US economy following a surprise interest rate cut by the Bank of Japan.
Speculation that the Fed will resume buying US Treasury bonds to push long-term interest rates down has weighed on the dollar, which fell to 83.14 against the yen from ¥83.25 in New York late Tuesday.
The dollar is hovering close to a 15-year-low of ¥82.87 - the level that triggered Japan’s intervention last month in a bid to buy dollars and weaken the yen. A strong yen hurts Japanese exporters because it cuts their overseas profits.
Japan’s benchmark Nikkei 225 stock average gained 122.58 points, or 1.3%, to 9,641.34 in the morning session after rallying 1.5% the previous day. Investors cheered the Bank of Japan’s move Tuesday to slash its key interest rate to virtually zero.
South Korea’s Kospi rose 1% to 1,899.93. Australia’s S&P/ASX 200 was up 1.6% at 4,680.50 and Hong Kong’s Hang Seng jumped 1.3% to 22,935.14.
Markets in Malaysia, New Zealand, Singapore and Taiwan also advanced. Financial markets in mainland China are closed through 7 October for the National Day holidays.
The Japanese bank’s surprise action and its pledge to pump more money into the nation’s struggling economy boosted market sentiment, lifting stocks worldwide Tuesday.
Investors were expecting the Federal Reserve, which next meets on 2 and 3 November, to buy more government debt to force down rates on mortgages and other loans to entice Americans to spend more.
On Wall Street, the Dow Jones industrial average jumped 193.45 points, or 1.8%, to 10,944.72 - the highest finish in nearly five months. The Dow also rallied after a trade group said Tuesday that activity in US services companies - the nation’s predominant job-generating sector - powered ahead in September.
In currencies, the euro fell to $1.3829 from $1.3832.
Benchmark crude for November delivery was down 31 cents at $82.51 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained $1.35 to settle at $82.82 a barrel on Tuesday.
Comment E-mail Print Share
First Published: Wed, Oct 06 2010. 08 57 AM IST