Hong Kong: Asian stocks rallied more than 4% to a one-month high on Wednesday on hopes governments worldwide will help out ailing industries and implement stimulus measures as they fight back against a deepening economic crisis.
The White House and US Congressional Democrats reached a tentative agreement on a bailout for beleaguered US auto makers, sending counterparts such as Honda Motor Co. sharply higher. Hopes are also rising in Asia for government-led help for key sectors such as technology. Global miner Rio Tinto Plc. also announced plans to cut capital spending, slash jobs and boost asset sales but said it would hold its dividend steady.
Oil rebounded more than $1 to above $43 (Rs2,111) a barrel from a slump on Tuesday. Assets seen as safer havens during volatile times such as the Japanese yen and US treasuries pulled back. “What we are seeing right now may be a gradual turnaround in global stocks as liquidity in financial markets is seen slowly improving, helped by the latest moves by governments,” said Jun Ji-won, a market analyst at Kiwoom.com Securities Co. Ltd in Seoul. “Stabilization in foreign exchange is also helping.”
The MSCI index of Asia-Pacific stocks outside Japan gained about 4.4% to top levels from a month ago. Japan’s Nikkei average gained 3.2%.
Governments worldwide are looking to spend their way out of sharply slowing economic growth via various stimulus measures, while expectations are rising they will also step in to help sectors and companies in trouble. In Taiwan, struggling memory chip maker ProMOS Technologies Inc. asked for government assistance, sending shares up 6.5%.?The main stock indexes in Hong Kong and India soared more than 5%, while those in South Korea, Taiwan and Singapore rose 3-4%. Australia and China saw smaller gains of 1-2%.