Fed's vow lifts Asian markets from rout
Source: Bloomberg News |
August 11, 2011, Thursday
|
Print Edition
Print Edition
ASIAN stocks yesterday rebounded from a two-week rout that wiped US$7.8 trillion from global equity markets, after the United States Federal Reserve pledged to keep its key interest rate at a record low through mid-2013 and said it may use other tools to bolster the world's biggest economy.
The Fed comments came after global markets tumbled in the wake of Standard & Poor's unprecedented cut of the US's credit rating. Li & Fung Ltd, a supplier of toys and clothes to Wal-Mart Stores Inc, advanced 2.4 percent in Hong Kong. BHP Billiton Ltd jumped 3.6 percent in Sydney as oil and metal prices rebounded. Commonwealth Bank of Australia led lenders higher after reporting second-half profit rose to a record.
"Markets are obviously responding positively to the Fed's statement," said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees US$150 billion. "The decision to hold rates steady until mid-2013 and open the door to more quantitative easing clearly points to a very prolonged period of sub-par economic growth that can't be good for asset markets in the longer run."
Japan's Nikkei 225 Stock Average rose 1.1 percent and the broader Topix Index added 0.8 percent, having spent much of Tuesday below a bottom that was set in the aftermath of the country's March 11 earthquake. The Nikkei 225 pared a gain of as much as 2.2 percent after the yen gained against the dollar, dimming the earnings outlook for the nation's exporters.
Hong Kong's Hang Seng Index added 2.3 percent, its steepest daily advance since November 1.
The Fed comments came after global markets tumbled in the wake of Standard & Poor's unprecedented cut of the US's credit rating. Li & Fung Ltd, a supplier of toys and clothes to Wal-Mart Stores Inc, advanced 2.4 percent in Hong Kong. BHP Billiton Ltd jumped 3.6 percent in Sydney as oil and metal prices rebounded. Commonwealth Bank of Australia led lenders higher after reporting second-half profit rose to a record.
"Markets are obviously responding positively to the Fed's statement," said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees US$150 billion. "The decision to hold rates steady until mid-2013 and open the door to more quantitative easing clearly points to a very prolonged period of sub-par economic growth that can't be good for asset markets in the longer run."
Japan's Nikkei 225 Stock Average rose 1.1 percent and the broader Topix Index added 0.8 percent, having spent much of Tuesday below a bottom that was set in the aftermath of the country's March 11 earthquake. The Nikkei 225 pared a gain of as much as 2.2 percent after the yen gained against the dollar, dimming the earnings outlook for the nation's exporters.
Hong Kong's Hang Seng Index added 2.3 percent, its steepest daily advance since November 1.
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