Asian stocks bounce back on Fed announcement
HONG KONG—Asian stocks rallied on Wednesday, part of a global uptick after the US Federal Reserve pledged to keep interest rates near zero for at least two years.
Tokyo rose 1.05 percent, or 94.26 percent, to 9,038.74, Sydney added 2.64 percent, or 106.5 points, to 4,141.3 and Seoul gained 0.27 percent, or 4.89 points, to 1,806.24.
Hong Kong ended up 2.34 percent, or 452.97 points, at 19,783.67 after a disastrous showing on Tuesday when it lost 5.66 percent.
Shanghai gained 0.91 percent, or 23.11 points, to 2,549.18.
Regional markets were following Wall Street, where shares jumped after a dovish Fed admitted economic growth this year had been “considerably slower” than expected, and indicated inflation fears had eased.
The bank’s policy committee stopped short of offering a successor to the $600 billion “QE2” stimulus program that wound up in June, though it said it was reviewing available tools to boost a slowing economy.
But the announcement on interest rates was enough to give some very decent support.
Wall Street staged an impressive rally in the final minutes of New York trade, with the Dow finishing up 3.98 percent, or 430 points, at 11,239.77. The index had been 200 points down 45 minutes before the close.
The broader S&P 500 climbed 4.74 percent, while the tech-heavy Nasdaq jumped 5.29 percent.
Asia’s gains carried forward to Europe, where London’s benchmark FTSE 100 index of leading companies jumped by as much as 1.8 percent, Frankfurt’s DAX 30 leapt 2.09 percent and in Paris the CAC 40 gained 1.88 percent.
Madrid soared 2.14 percent and Milan added 2.8 percent at the open, boosted also after the European Central Bank signaled it would purchase government bonds from struggling debt-laden eurozone member nations to ease their borrowing costs.
In Seoul the decision to ban the short-selling of all listed stocks for three months effective from early Wednesday helped to cool the selling frenzy.
Sentiment was positive in Sydney, which staged a stunning turnaround on Tuesday to fully recover from a slump of more than 5.5 percent.
“Whilst it is very positive to see the gains, the big question is going to be how long the rally lasts before participants are faced with the question of whether this is just a bounce, like it usually is, or is actually a meaningful bottom,” said IG Markets analyst Ben Potter.
Crude recovered a little in tandem with Asian equities, with New York’s main contract, light sweet crude for delivery in September, up $2.42 to $81.72 per barrel in the afternoon. Brent North Sea crude for September delivery added $2.30 to $104.87.
The gains came on the back of recent steep falls and despite the downbeat assessment of economic prospects in the United States, the world’s largest oil consumer.
Gold closed in Hong Kong at $1,761.50-$1,762.50 dollars an ounce, up from its US close around $1,744, but well down on the record high it hit in volatile Tuesday trade above $1,780.
The dollar edged down against the yen, hitting 76.70 yen in early European trade, from 76.94 yen in New York late Tuesday.
The euro was also rangebound against the dollar and the yen. The European common currency edged up to $1.4376 from $1.4374 while it was down at 110.10 yen against 110.50 yen.
In other markets:
— Singapore closed down 2.18 percent, or 62.91 points, at 2,821.09.
Sembcorp Industries fell 6.99 percent to Sg$4.26 and Singapore Airlines dived 3.99 percent to Sg$10.82.
— Taipei surged 3.25 percent, or 243.20 points, to 7,736.32.
Taiwan Semiconductor Manufacturing Co. was 3.95 percent higher at Tw$65.8 while leading food maker Uni-President Enterprise gained 6.02 percent to Tw$43.15.
— Manila closed 3.20 percent, or 133.11 points, higher at 4,290.14.
Lepanto Consolidated Mining rose 6.67 percent to 1.28 pesos, Philex Mining surged 8.40 percent to 27.10 pesos and Ayala Corp. gained 1.99 percent to 308 pesos.
— Wellington rose 2.77 percent, or 85.96 points, to 3,183.74.
Telecom Corp. rose 1.5 percent to NZ$2.405, NZ Oil & Gas lifted 3.3 percent to NZ$0.63 and Air New Zealand surged 4.6 percent to NZ$1.13.
— Kuala Lumpur ended up 0.57 percent, or 8.38 points, at 1,480.52.
Financial firm CIMB Group gained 0.5 percent to 8.14 ringgit, while gaming giant Genting Bhd rose 1.4 percent to 10.20. Budget carrier AirAsia fell 10.4 percent to 3.54 ringgit.
— Jakarta rose 3.44 percent, or 128.46 points, to 3,863.57.
Bank Rakyat Indonesia gained 4 percent to 6,550 rupiah, while car maker Astra International jumped 5.8 percent to 67,800 rupiah.
— Bangkok rose 1.69 percent, or 17.67 points, to 1,060.21.
Banpu gained 16 baht to 686, while PTT added 6 baht to 317.
— Mumbai gained 1.62 percent, or 272.60 points, to 17,130.51.
India’s largest vehicle maker Tata Motors rose 6.08 percent or 48.35 rupees to 843.9 while rival Maruti Suzuki India jumped 5.95 percent, or 71.9 rupees, to 1,279.7.
India’s largest private metal producer Hindalco rose 5.24 percent to 155.55.
