Asia stocks rebound, dollar at 12-year high against euro
People walk past an electronic board displaying Japan’s Nikkei stock index and other financial indexes in Tokyo on Thursday, March 12, 2015. Asian stock markets mostly rose Thursday, finding a firmer footing after several days of volatile trading linked to anxiety over a probable rate hike in the US. AP PHOTO/SHUJI KAJIYAMA
HONG KONG–The dollar edged closer toward parity with the euro Thursday after the European Central Bank kicked off its stimulus program this week, while Asian equity markets recovered slightly from a recent sell-off.
Sydney shares were given a lift by data showing Australia’s unemployment rate had eased slightly, while South Korea became the latest country to cut interest rates as it struggles to fight off deflation.
Tokyo rallied 1.43 percent, or 267.59 points, to 18,991.11, Sydney added 0.98 percent, or 56.97 points, to close at 5,850.17 and Shanghai rallied 1.78 percent, or 58.42 points, to 3,349.32, while Hong Kong advanced 0.34 percent, or 79.99 points, to 23,797.96.
However, Seoul fell 0.52 percent, or 10.24 points, to close at 1,970.59.
Traders brushed off more losses on Wall Street, where the three main indexes have given up all their 2015 gains on expectations the Federal Reserve will raise interest rates as early as the summer.
The Dow fell 0.16 percent, the S&P 500 shed 0.19 percent and the Nasdaq eased 0.20 percent.
However, bets on the rate increase, mixed with the ECB’s new asset-purchase scheme, known as quantitative easing (QE), has sent the dollar soaring to 12-year highs against the euro.
On Thursday the single currency fetched $1.0542, down from $1.0548 Wednesday in US trade and around its weakest level since March 2003.
With the ECB just starting on QE and the Fed due to lift rates, analysts are tipping dollar-euro parity possibly by next year, which would be the first time since 2002.
‘Dollar crushing it’
“The asset-purchase program, which is starting now, that’s obviously going to drive the euro lower,” said Fabian Eliasson, head of US corporate foreign-exchange sales at Mizuho Financial Group.
“The dollar is just crushing it across the board.”
The euro also bought 128.77 yen against 128.10 yen, with investors nervously watching strained talks between Greece and its European creditors over reforming its bailout obligations.
The greenback, meanwhile, was at 121.30 yen on Thursday in Tokyo against 121.44 yen in New York.
“We’ve never seen stimulus created like this before and how you bleed that out is creating a lot of uncertainty as to what’s going to happen,” Michael Cuggino, president of Pacific Heights Asset Management LLC in San Francisco, told Bloomberg TV.
“There’s such a divergence between what’s going on in the rest of the world with central banks cutting rates and the US likely raising them.”
South Korea’s central bank announced a surprise cut in interest rates to a record low 1.75 percent Thursday in a bid to avert a painful deflationary spiral and kick-start the struggling economy.
The dollar rose to 1,131.55 won from 1,126.40 won on Wednesday.
Korea is the latest country–following China, India and Australia–to lower rates in the face of falling prices and weak economic growth.
On oil markets US benchmark West Texas Intermediate rose 37 cents to $48.54 while Brent crude rose 42 cents to $57.96.
Gold fetched $1,159.90 against $1,157.55 late Wednesday.
In other markets:
— Mumbai rose 0.95 percent, or 271.24 points, to end at 28,930.41.
Sesa Sterlite Limited gained 3.63 percent to 200 rupees, while pharmaceutical major Dr. Reddy’s Laboratories fell 1.40 percent to 3,422.00 rupees.
— Kuala Lumpur’s main index closed 0.49 percent higher, or 8.71 points, at 1,786.87.
Malayan Banking was up 0.33 percent to 9.12 ringgit, AMMB Holdings gained 0.32 percent to 6.33 ringgit, while RHB Capital dropped 1.53 percent to 7.74 ringgit.
— Jakarta closed up 0.37 percent, or 20.27 points, at 5,439.83.
Carmaker Astra International gained 0.64 percent to close at 7,900 rupiah, while Bank Central Asia fell 0.53 percent to 14,200 rupiah.
— Singapore fell 0.15 percent, or 4.99 points, to close at 3,373.60.
Singapore Airlines climbed 2.41 percent to Sg$11.90 while United Overseas Bank (UOB) declined 0.40 percent to Sg$22.55.
— Thailand edged up by 0.03 percent, or 0.5 points, to 1,544.34.
Media company True Corporation rose 1.48 percent to close at 13.70 baht, while energy giant PTT closed down 0.91 percent at 327.00 baht.
— Taipei rose 0.76 percent, or 72.82 points, to 9,596.00.
