Storify Feed Feedburner Facebook Twitter Flickr Youtube

ROS Lboard

Asian shares boosted by Fed move,US bank test

March 14, 2012

HONG KONG: Asian markets rallied today after the Dow on Wall Street hit a more than four-year high, while the US Fed gave an upbeat assessment of the economy and top US banks passed crucial stress tests.

The dollar also pushed towards 83 yen, lifting Tokyo shares, while the sense of optimism was boosted by a surprise move by Fitch to raise Greece’s credit rating out of default.

Tokyo jumped 2.03% by the break, Hong Kong rose 1.21%, Sydney gained 0.97%, Seoul added 1.47% and Shanghai was 0.48% higher.

Traders were following the lead of the Dow Jones Industrial Average, which jumped 1.68% to 13,177.68 – its best finish since Dec 31, 2007 – thanks to a string of good news.

The US central bank, following its monthly policy meeting yesterday, upgraded its view of the world’s number one economy, saying the jobs market and consumer and business spending had improved since January.

While acknowledging it was still facing problems the Fed, which kept interest rate on hold at record lows, said: “Labor market conditions have improved further; the unemployment rate has declined notably in recent months but remains elevated.”

“Strains in global financial markets have eased, though they continue to pose significant downside risks to the economic outlook.”

The comments contrasted with the downbeat tone of Fed chairman Ben Bernanke in testimony to Congress on February 29, when he said consumer sentiment and spending capability remained weak and was holding back the economy.

The statement came as another batch of data showed retail sales surged 1.1% month on month in February, the fastest pace in five months. Consumer spending accounts for about 60 percent of gross domestic product in the United States.

Sentiment in the financial sector was also lifted after the Fed said 15 US banks, including JPMorgan Chase and Wells Fargo, had passed tests to see if they would be able to withstand another economic meltdown.

The dollar rose to 82.90 yen in New York late Tuesday and in early Asian trade had edged higher to 82.96 yen.

The move allowed the banks to announce a surge in dividend payments.

In Europe Fitch Ratings upgraded Greece to “B-” with a stable outlook from restricted default after its successful bond saw with private creditors last week that wiped around 100 billion euros off its debt.

It said the move “significantly improved Greece’s debt service profile and reduced the risk of a recurrence of near-term repayment difficulties on the new Greek government securities”.

The euro bought US$1.3080 and 108.52 yen in early Asian trade today, compared with US$1.3075 and 108.38 yen in New York late yesterday.

On oil markets New York’s main contract, light sweet crude for delivery in April down two US cents to US$106.69 and Brent North Sea crude for April delivery shedding 15 US cents to US$126.07.

Gold was at US$1,676.40 an ounce at 0230 GMT, compared with US$1,693.90 late yesterday.

- AFP


Comments

Readers are required to have a valid Facebook account to comment on this story. We welcome your opinions to allow a healthy debate. We want our readers to be responsible while commenting and to consider how their views could be received by others. Please be polite and do not use swear words or crude or sexual language or defamatory words. FMT also holds the right to remove comments that violate the letter or spirit of the general commenting rules.

The views expressed in the contents are those of our users and do not necessarily reflect the views of FMT.

Comments