Asian markets up on Fed stand, strong yen hits Tokyo
HONG KONG — Asian markets mostly rose on Wednesday after US Federal Reserve head Ben Bernanke reaffirmed the central bank’s huge monetary easing scheme, but a stronger yen sent Tokyo lower.
Investors remained hesitant and the euro came under pressure after Italy’s election results which left no party in overall control, raising concerns that uncertainty in Rome could see the eurozone return to the dark days of crisis.
Tokyo fell 0.78 percent by noon but Hong Kong rose 0.44 percent, Sydney added 0.64 percent, Shanghai climbed 1.14 percent and Seoul was 0.18 percent higher.
In testimony to Congress Bernanke said the Fed’s $85 billion a month bond-purchase programme aimed at holding down long-term interest rates and encouraging investment — known as quantitative easing — was still merited.
While warning that looming steep budget cuts could slow growth, he stressed high unemployment was a main challenge to the economy, adding that the risks of the programme — inflation, and risky behaviour in the financial industry — were being monitored closely.
Bernanke said the programme was “providing important support to the recovery”.
His comments on Tuesday were a relief for financial markets, which stumbled last week after minutes from the Fed’s latest policy meeting suggested some members wanted to curtail the policy before the economy was back in track.
“Bernanke confirmed the Fed’s commitment to continue quantitative easing until unemployment falls, and US economic data are clearly improving,” Martin Lakos, division director in Macquarie’s Private Wealth division in Australia, told Dow Jones Newswires.
On Wall Street the Dow rose 0.84 percent, the S&P 500 added 0.61 percent and the Nasdaq jumped 0.43 percent.
US investors also took comfort in surprisingly robust new home sales while the Conference Board’s February consumer confidence index showed a surprise jump to 69.6 from 58.4 in January, well above the average analyst estimate of 62.0.
But the dollar fell against the yen in Asia as dealers sought the safe havens after the inconclusive Italian elections.
The dollar bought 91.70 yen in Tokyo Wednesday, from 91.93 yen in New York late Tuesday and well off the 94.77 yen high seen on Monday.
The euro slipped to $1.3043 and 119.60 yen from $1.3061 and 120.08 yen.
Eurozone fears have been reignited after the Italian polls, which left the country with a hung parliament and a protest party effectively holding the balance of power.
Investors fear the outcome will mean Italy will reverse the austerity policies put in place to pay off its debts, with implications for the wider region.
Italian leftist leader Pier Luigi Bersani, who said he had “come first but not won”, warned that the huge anti-austerity protest vote should be heeded beyond Italy’s borders, adding: “The bell tolls also for Europe.”
Oil prices were mixed, with New York’s main contract, light sweet crude for delivery in April, shedding two cents to $92.61 while Brent North Sea crude for April delivery gained three cents to $112.74.
Gold was at $1,612.40 at 0220 GMT compared with $1,597.80 late Tuesday.