Asia shares rally as Fed nominee backs stimulus

  • Economy
  • Friday, 15 Nov 2013

HONG KONG: Asian markets rallied for a second day on Friday after the woman tipped to take over as Federal Reserve chief indicated she would maintain its stimulus programme for as long as needed.

The dollar was also at two-month highs above 100 yen, helped by weak growth data out of Japan and the eurozone.

Tokyo jumped 1.95%, or 289.51 points, to a six-month high of 15,165.92, while Sydney added 0.86%, or 43.6 points, to end at 5,401.7 and Seoul put on 1.94%, or 38.08 points, to close at 2,005.64.

Shanghai surged 1.68%, or 35.32 points, to 2,135.83 on speculation that Beijing will announce a plan to revamp the country's vast state sector. The index had tumbled earlier this week after a much-anticipated reform plan by China's leaders lacked any detail.

Hong Kong was 1.69% higher, adding 383.00 points, at 23,032.15. Mumbai was closed for a public holiday.

Janet Yellen told her Senate hearing Thursday she would not consider ending the Fed's bond-buying scheme as long as growth remained tepid and unemployment elevated.

"I consider it imperative to do what we can to promote a very strong recovery," Yellen, President Barack Obama's pick to lead the Fed, told the Senate Banking Committee.

The news sent Wall Street into another rally. The Dow climbed 0.35% while the S&P 500 rose 0.48%, both hitting record highs again. The Nasdaq added 0.18%.

Global shares had climbed on Thursday after the release of Yellen's prepared statements that highlighted her support for the scheme.

She gave no hint of when she would wind down the US$85bil-a-month scheme, saying – like current chairman Ben Bernanke – everything was data-driven and that current data suggested the economy still required Fed support.

Her comments will come as some relief to emerging economies, which have been in turmoil in recent months owing to uncertainty about the future of the stimulus, which has been credited with a global investment splurge.

Despite expectations the Fed will continue pumping billions of dollars into financial systems, the greenback broke 100 yen in New York, and extended those gains in Asia Friday, following soft growth data out of Japan and Europe.

Tokyo said Thursday economic growth fell to 1.9% in the July-September quarter as exports weakened and consumer spending slowed. The economy expanded 3.8% in the previous three months.

And the Eurostat statistics agency said the eurozone grew just 0.1% in the third quarter – compared with 0.3% in April-June – with Germany off its stride and France hit by a surprise contraction.

In afternoon Tokyo trade the dollar bought 100.26 yen compared with 100.00 yen in New York and its highest level since early September.

The euro fetched US$1.3449 and 134.86 yen compared with US$1.3459 and 134.61 yen.

On oil markets New York's main contract, West Texas Intermediate for December delivery, was up 19 cents to US$93.76 a barrel in Asian trade, while Brent North Sea crude for December eased 34 cents to US$108.18.

Gold fetched US$1,283.10 per ounce at 0800 GMT compared with US$1,283.06 on Thursday.

In other markets, Taipei rose 0.52%, or 42.11 points, to 8,177.12, as smartphone maker HTC fell 0.98% to NT$152.0 while Taiwan Semiconductor Manufacturing Co. was 0.48% higher at NT$104.0.

Manila rose 0.29%, or 18.52 points, to 6,346.40 – AFP.

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