Asian shares mostly up on US growth revision
HONG KONG—Asian markets rallied Thursday, following big gains on Wall Street, as dealers took a downward revision of US economic growth as a sign the Federal Reserve will not reel in its stimulus program any time soon.
Receding concerns about a liquidity crisis in China also provided some support, while the dollar and commodities also enjoyed gains as bargain-buyers moved in.
Tokyo added 2.96 percent, or 379.54 points, to 13,213.55 while Hong Kong was 0.50 percent, or 101.53 points, up at 20,440.08.
Shanghai spent most of the day in positive territory before profit-taking saw it close flat, dipping 1.49 points to 1,950.01.
Seoul surged 2.87 percent, or 51.25 points, to 1,834.70 after data showed South Korea had posted a record current account surplus in May.
And Sydney climbed 1.68 percent, or 79.6 points, to 4,811.3. However, analysts said investors were not moved by news that Julia Gillard had been ousted as prime minister by Kevin Rudd, her predecessor. Rivkin global analyst Tim Radford said dealers were awaiting Rudd’s communication on policy.
The gains came after the US Commerce Department slashed its estimate for first-quarter growth in the world’s biggest economy from 2.4 percent to 1.8 percent.
The data raised the prospect that the Fed will sit tight on winding down its bond-buying scheme, known as quantitative easing (QE), as it waits for the economy to show more signs of strength.
Investors “now understand that the Fed is only going to pull back on its QE if the economy is continuing to improve,” said Michael James, managing director of trading at Wedbush Morgan Securities.
“If we are not seeing economic improvement, the Fed is not going to remove their QE.”
The Dow jumped 1.02 percent, the S&P 500 rose 0.96 percent and the Nasdaq added 0.85 percent.
Adding to the upbeat outlook, the European Central Bank said it would keep its own loose monetary policy in place for the foreseeable future as it tries to stoke growth in the recession-hit eurozone.
In China a cash squeeze that sent global markets tumbling this week showed signs of easing slightly on Thursday, with dealers saying there was more money being provided by better capitalized large state-run banks.
The seven-day rate of interbank borrowing dropped to 6.91 percent from 7.29 percent on Wednesday’s close and well down from the 11.62 seen last Thursday, soothing concerns that lending would freeze up and damage China’s economy.
On forex markets the dollar edged higher after enjoying a rally on Wall Street. The unit bought 98.15 yen in afternoon trade, against 97.82 yen late in New York. It is also up from 97.45 yen on Wednesday in Asia.
The euro fetched $1.3037 and 127.99 yen compared with $1.3007 and 127.24 yen.
Gold rebounded slightly after sinking to $1,224.18 on Wednesday—its lowest level since August 2010 and well down from its record high of around $1,920 in 2011—owing to expectations of the Fed’s wind-down.
Bullion fetched $1,229.60 per ounce by 1045 GMT.
Oil prices rose, with New York’s main contract, West Texas Intermediate light sweet crude for delivery in August, up 39 cents at $95.89 a barrel and Brent North Sea crude for August gaining 52 cents to $102.18 in late afternoon trade.
In other markets:
— Taiwan gained 1.27 percent, or 99.10 points, to 7,883.9.
Taiwan Semiconductor Manufacturing Company rose 2.96 percent to Tw$104.5 while smartphone maker HTC fell 2.04 percent to Tw$240.5.
— Wellington climbed 0.53 percent, or 23.36 points, to 4,416.96.
Fletcher Building added 0.5 percent to NZ$8.45 and Fonterra Shareholders Fund was 0.4 percent higher at NZ$7.24.
— Manila closed 3.42 percent higher, adding 209.06 points to 6,328.00.
Philippine Long Distance Telephone rose 3.6 percent to 2,902 pesos and Ayala Land put on 1.38 percent to 29.40 pesos.
— Kuala Lumpur gained 0.62 percent, or 10.81 points, to 1,751.57.
UEM Sunrise rose 4.1 percent to 3.08 ringgit while Hong Leong Financial Group ended 3.5 percent higher at 14.22.
— Singapore rose 0.44 percent, or 13.63 points, to 3,118.03.
Vehicle distributor Jardine Cycle and Carriage gained 1.55 percent to Sg$42.00, while Singapore Telecommunications rose 3.33 percent at Sg$3.72.
— Bangkok gained 1.55 percent, or 22.07 points, to 1,446.45.
Supermarket operator Big C Supercenter added 5.03 percent to 198.50 baht, while Charoen Pokphand Foods jumped 7.74 percent to 25.75 baht.
— Jakarta ended up 1.92 percent, or 88.02 points, at 4,675.75.
Food manufacturer Indofood Sukses Makmur rose 2.17 percent to 7,050 rupiah, while lender Bank Permata fell 0.61 percent to 1,640 rupiah.
— Mumbai rose 1.75 percent, or 323.83 points, to 18,875.95 points.
State-run oil explorer ONGC rose 4.14 percent to 320.55 rupees and private energy giant Reliance Industries rose 3.48 percent to 830.45 rupees.—Danny McCord with Dow Jones Newswires