Asian markets take breather after surge on Fed move

HONG KONG—Asian markets were mixed on Monday following strong advances at the end of last week after the Federal Reserve announced a huge stimulus plan to boost the US economy.

The euro eased slightly as forex dealers took a breather after the single currency made healthy gains Friday following the unveiling of the open-ended bond-buying program.

Sydney added 0.29 percent, or 12.5 points, to close at 4,402.5, Seoul lost 0.26 percent, or 5.23 points, to 2,002.35 and Hong Kong rose 0.14 percent, or 28.33 points, to 20,658.11.

Shanghai tumbled 2.14 percent, or 45.35 points, to 2,078.50, with shares tied to Japanese firms worst hit owing to a territorial dispute between Beijing and Tokyo that has sparked protests in China.

Tokyo and Kuala Lumpur were closed for public holidays.

The Fed said Thursday it would start a third program of bond-buying, by purchasing $40 billion a month in mortgage-backed bonds, known as quantitative easing (QE3), and would keep the scheme in place until it saw substantial improvement in the jobs market.

It also said it would extend its “Operation Twist” scheme of selling short-term debt and buying long-term bonds with the proceeds in order to keep long-term interest rates as low as possible.

“The big question is how long this Fed-inspired rally will continue as QE3 was the last bazooka to be used in (its) arsenal,” Jason Hughes, analyst at IG Markets Singapore, told Dow Jones Newswires.

“When the smoke clears, there is a lot of uncertainty over what such stimulus can do for the global economy.”

The Fed move came a week after the European Central Bank said it would buy unlimited quantities of debt from under-pressure eurozone nations such as Spain and Italy in a bid to cut their borrowing costs, which had hit danger levels.

On Wall Street Friday the Dow rose 0.40 percent, the S&P 500 added 0.40 percent and the Nasdaq gained 0.89 percent.

Thursday’s Fed announcement, which dealers welcomed as going further than expected because it is open-ended, also gave a huge boost to the euro although it eased a tad Monday.

The single currency jumped to $1.3140 at one point Monday before falling back to $1.3110 in early European trade, compared with $1.3127 late Friday in New York, while it was at 102.81 yen from 102.90 yen.

The dollar bought 78.40 yen in early European trade, compared with 78.28 yen in New York.

In Shanghai shares with links to Japan were hit as thousands of demonstrators mounted protests across China over an islands dispute between Tokyo and Beijing.

Demonstrators in the southern city of Shenzhen – some holding a banner calling for a “bloodbath” in Tokyo – clashed with riot police, who fired tear gas to disperse the crowd, Hong Kong broadcaster Cable TV showed.

On oil markets, New York’s main contract, light sweet crude for delivery in October, fell 24 cents to $99.14 98.76 and Brent North Sea crude for November delivery fell 34 cents to $116.32.

Gold was at $1,770.20 at 1030 GMT compared with $1,773.30 on Friday.

In other markets:

— Taipei rose 0.31 percent, or 24.17 points, to 7,762.22.

Smartphone maker HTC surged 5.90 percent to Tw$314.0 while Hon Hai Precision was 0.52 percent higher at Tw$97.5.

— Manila closed 0.53 percent higher, adding 28.43 points, to 5,350.90.

Ayala Land gained 2.58 percent to 23.90 pesos while Philippine Long Distance Telephone Co. rose 0.69 percent to 2,890 pesos.

— Wellington climbed 0.66 percent, or 24.89 points, to 3,817.23.

Telecom gained 0.60 percent to NZ$2.50 and Fletcher Building was up 2.1 percent at NZ$6.94.

— Singapore closed up 0.27 percent, or 8.30 points, to 3,078.72.

Wilmar International gained 1.54 percent to Sg$3.29 and Jardine Cycle and Carriage rose 0.76 percent to Sg$49.06.

— Bangkok gained 0.19 percent, or 2.42 points, to 1,278.54.

Telecoms company ADVANC dropped 1.87 percent to 210.00 baht, while coal producer Banpu edged up 3.14 percent to 460.00 baht.

— Jakarta closed down 0.04 percent, or 10.47 points, at 4,255.28.

Telkom was down 4.2 percent at 9,250 rupiah and Bank Rakyat dropped 1.4 percent at 7,300 rupiah.

— Mumbai rose 0.42 percent, or 78.04 points, to 18,542.31.

Pantaloon Retail jumped 19.04 percent to 187.6 rupees while private airline Kingfisher rose 19.98 percent to 12.97 rupees.