Asian stocks rally on central bank offensive
HONG KONG — Asia-Pacific stocks staged a smart opening rally Friday after the world’s most powerful central banks offered dollar supplies to benefit lenders under pressure from the eurozone debt crisis.
The European Central Bank and its US, Japanese, Swiss and British counterparts announced Thursday they would act in concert to lend US dollars to banks facing a shortage of the American currency.
The move sent European stocks soaring and helped Wall Street stay in positive territory for the fourth day in a row, with the Dow Jones Industrial Average closing up 1.66 percent at 11,433.18.
Asian shares followed the lead, with Japanese stocks gaining 1.82 percent and Hong Kong rising 2.21 percent. In mid-morning trade, the benchmark Nikkei-225 index at the Tokyo Stock Exchange rose 158.60 points to 8,827.46.
The Nikkei index could rise on temporary relief after the central banks’ pledge, said Hideyuki Ishiguro, a strategist at Okasan Securities.
But the fundamental debt issue in Europe remains unresolved and could lead to some profit-taking later in the day ahead of a three-day weekend in Japan, he told Dow Jones Newswires.
Article continues after this advertisementHong Kong shares also got off to a strong start. The Hang Seng Index rose 424.60 points, or 2.21 percent, to 19,606.10 in the first few minutes.
Article continues after this advertisementSouth Korea’s benchmark KOSPI index was up 2.1 percent, or 37 points, at 1,811.08 after some 40 minutes of trading.
“[I] think the index can advance by 20 to 50 points today,” Shinhan Investment analyst Lee Sun-Yup told Dow Jones Newswires.
In Australia, the market was trading up 2.04 percent mid-morning with the benchmark S&P/ASX200 index gaining 82.96 points to 4,154.7. The broader All Ordinaries was up 1.87 percent.
But the European debt crisis is still weighing on investors, Commsec market analyst Steven Daghlian said.
“Even when you take into account the gains we’ve seen over the past couple of days in Australia, the All Ords Index is still down about 14 percent this year and we lost about five percent in September, so we still have a long way to go,” Daghlian said.
The euro was fetching $1.3869 in early Asian trade, compared with $1.3882 late Thursday in New York where the common European currency jumped after the move to aid Europe’s struggling banks.
The dollar was at 76.69 yen, almost unchanged from New York. Shortly after 0100 GMT, gold was trading at 1,781.00 US dollars per ounce.
