Tuesday, March 27, 2012

Bernanke comments boost Asian markets

HONG KONG: Asian markets rallied on Tuesday after Federal Reserve Chairman Ben Bernanke warned the US economy was still fragile and would keep easy monetary policy in place.

While his comments played down recent strong jobs growth figures, traders on Wall Street jumped on them, and the prospect of more dollars floating around the market sent the greenback lower against the euro.

The Nikkei 225 index at the Tokyo Stock Exchange climbed 175.19 points to end the morning at 10,193.43, at one point topping 10,200 for the first time since July.

The Topix of all first-section shares also added 1.75 per cent, or 14.94 points, to 866.76.

"Market sentiment has temporarily rebounded" after Bernanke discussed Monday the need to maintain accommodative policies, said Fumiyuki Nakanishi, general manager of investment and research at SMBC Friend Securities.

The strong performance on Wall Street and a better-than-expected German business confidence index for March also lifted the Nikkei, said Rakuten Securities senior market analyst Masayuki Doshida.

"Bernanke's comments signal that fundamental conditions of the US economy haven't been so strong, which
means this year's share rallies have been the result of easing stimulus," Doshida told Dow Jones Newswires.

German Chancellor Angela Merkel's suggestion that Berlin may be open to lifting the eurozone's bailout capacity for debt-ridden bloc nations also encouraged investors, SMBC's Nakanishi said.

Window-dressing ahead of the fiscal year-end this week spurred buying across a broad range of shares, Nakanishi added.

The benchmark Hang Seng Index gained 282.36 points to 20,951.22, on turnover of HK$26.39 billion ($3.38 billion).

Bernanke on Monday said the central bank would likely keep stimulative policies in place despite improvements to the jobs market.

The comments helped the Dow Jones Industrial Average to close up 1.23 per cent at 13,241.63.

The Fed has held interest rates at record lows since the global financial crisis, with talk that recent falls in unemployment could lead the bank to start tightening policy as early as the second half of this year.

There had been talk that recent falls in unemployment could lead the bank to start tightening policy as early as the second half of this year.

"Basically Bernanke lit a flame under the market and we've seen risk on," said Macquarie Equities Investment Advisor Brad Gordon in Auckland, according to Dow Jones Newswires.

On Wall Street the Dow rose 1.23 per cent, the S&P 500 gained 1.39 per cent and the tech-rich Nasdaq added 1.78 per cent.

The euro surged against the dollar in New York trade, with the European unit also getting support from the closely watched Ifo index of business confidence, which rose for a fifth straight month to its highest level since July 2011.

The common currency jumped to $1.3356 late Monday, from $1.3262 earlier in Asia.

In Tuesday morning trade in Tokyo it was at $1.3352. It was also slightly higher at 110.76 yen, compared with 110.68 yen. The dollar was at 82.97 yen from 82.87 yen.

On oil markets New York's main contract, West Texas Intermediate for delivery in May, gained one cent to $107.04 per barrel while Brent North Sea crude for May settlement was down nine cents at $125.56.

Gold was at $1,687.76 an ounce at 0255 GMT, compared with $1,661.40 late Monday.

View the original article here
Source From Channel News Asia

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