Asian markets lifted by US, Europe stimulus hopes
A man checks share prices as others walk by the electronic stock board of a securities firm in Tokyo Thursday, June 7, 2012. Asian stock markets rose Thursday, boosted by hopes that Europe is preparing to take action to tackle the region's financial crisis and comments from a Fed policymaker about possible support for the US economy. AP PHOTO/KOJI SASAHARA
HONG KONG—Asian markets mostly rose for a third successive day on Thursday, posting strong gains on hopes for stimulus measures in the United States and Europe as well as promises of help for Spain’s banks.
The euro also held up against the yen and dollar after impressive gains in New York late Wednesday, with dealers feeling a little more confident European leaders can navigate the long-running crisis.
Tokyo closed 1.24 percent, or 106.19 points, higher at 8,639.72, while Seoul soared 2.56 percent, or 46.10 points, to 1,847.95, and Sydney rose 1.31 percent, adding 53.3 points, to 4,108.6.
In the afternoon Hong Kong rose 0.85 percent, or 157.76 points, to 18,678.29 but Shanghai closed 0.71 percent lower, shedding 16.43 points to 2,293.13 owing to nervousness ahead of the release of key economic data at the weekend.
Regional investors followed the lead of their counterparts in Europe and the United States.
While a decision by the European Central Bank to keep rates on hold disappointed investors, its head Mario Draghi said some governors on the policy committee had wanted a cut.
He added that Wednesday’s decision was “taken by very broad consensus” — which analysts took to mean that there could be a reduction next month.
The bank also said it would keep cash flowing to the 17-nation eurozone’s embattled banks, at least through year-end.
On Spain, French Finance Minister Pierre Moscovici on Wednesday said the eurozone was ready to “mobilise very rapidly” to assist if Madrid requested it, slightly easing fears in the region’s fourth largest economy.
Spain has become a huge concern for the eurozone, with Germany against providing aid to Spain to help its banks without a bailout, and other states flexible on how to help Madrid without resorting to a full rescue.
The likelihood of another round of stimulus in the United States rose again as the Fed looks to head off the effects of the European slump on the world’s number one economy.
Dennis Lockhart, president of the Atlanta Federal Reserve, said the central bank might need to consider more easing if economic growth there hits more roadblocks, days after another poor batch of jobs growth data.
He said if domestic growth is no longer possible “further monetary actions to support the recovery will certainly need to be considered,” while the Fed rate-setting committee needs to be ready to respond to economic instability.
“The market is starting to price in additional policy response, and there is a greater expectation that something might happen before the Greek election (on June 17),” Tim Schroeders, fund manager, at Pengana Capital in Australia, told Dow Jones Newswires.
Eyes will now be on Fed Chairman Ben Bernanke’s testimony on the US economic outlook later in the day for clues to the bank’s response.
Investors in Europe and New York welcomed the comments. On Wall Street the Dow surged 2.37 percent, the S&P 500 rose 2.30 percent and the Nasdaq climbed 2.40 percent.
In Europe, shares in London, Frankfurt, Paris and Madrid were all more than two percent higher on Wednesday and they extended those gains in early trade on Thursday.
Amid concerns about the impact of Europe’s crisis on the US economy President Barack Obama called British, German and Italian leaders Wednesday to press the case for an “immediate plan” to find a resolution.
“The leaders agreed on the importance of steps to strengthen the resilience of the eurozone and growth in Europe and globally,” White House spokesman Jay Carney said.
Hours later, on Thursday morning in Europe German Chancellor Angela Merkel said she wanted to work toward political union but warned that an EU summit later this month would not solve the region’s problems at once.
On currency markets the euro rose after successful bonds auctions in Spain and France, indicating a little more confidence among investors.
The common currency fetched $1.2581 and 99.96 yen in early European trade, compared with $1.2580 and 99.63 yen in New York late Wednesday.
It had been sitting at $1.2490 and 98.60 yen in Asia earlier on Wednesday.
The dollar was at 79.44 yen Thursday, against 79.20 yen.
Oil was also lower in late afternoon trade. New York’s main contract, light sweet crude for delivery in July, was down 15 cents to $84.87 a barrel in the late afternoon and Brent North Sea crude for July delivery fell 52 cents to $100.12.
Gold was at $1,625.33 an ounce at 1200 GMT, compared with $1,635.50 late Wednesday.
In other markets:
— Singapore closed flat, edging down 1.57 points to 2,759.26.
Real estate developer Capitaland was up 0.39 percent at Sg$2.59 while Singapore Airlines fell 0.20 percent to Sg$10.19.
— Taipei gained 0.34 percent, or 24.16 points, to 7,080.31.
— Manila closed 1.14 percent, or 56.37 points, higher at 5,022.95.
— Wellington closed 0.27 percent, or 9.44 points, higher at 3,273.96.
Auckland Airport rose 0.8 percent to NZ$2.53, Telecom climbed 1.01 percent to NZ$2.50 and Contact Energy was up 0.42 percent at NZ$4.76, while Fletcher Building eased 0.16 percent to NZ$6.29.
— Kuala Lumpur rose 0.37 percent, or 5.88 points, to 1,575.31.
Budget carrier AirAsia added 1.93 percent to 3.70 ringgit, financial firm CIMB Group Holdings gained 0.13 percent to 7.50 ringgit and utility Tenaga Nasional lost 0.62 percent to 6.39 ringgit.
— Jakarta was almost unchanged, nudging down 0.74 points to 3,840.60.
— Bangkok was flat, edging up 0.58 points to 1,118.53.
— Mumbai rose 1.18 percent, or 194.75 points, to 16,649.05.
