Asian stock markets edge higher after North American rally
March 18, 2009
BY ELAINE KURTENBACH
THE ASSOCIATED PRESS
SHANGHAI — Asian markets rose modestly Wednesday after an overnight surge on Wall Street boosted sentiment across the region, while Tokyo shares were buoyed by fresh support for the wobbly financial system from the Japanese central bank.
Hong Kong’s Hang Seng index led the region, gaining 239.08 points, or 1.9 per cent, to 13,091.03, while Tokyo’s benchmark Nikkei 225 stock average added 23.04 points, or 0.3 per cent, to 7,972.17.
The Japanese central bank said it was increasing its purchase of government bonds to keep ample cash in the monetary system following a two-day meeting where it also decided to keep its key interest rate at 0.1 per cent. The Bank of Japan also said it was considering providing loans to commercial banks as an option to shore up their capital bases.
“Investors took heart from the bank’s moves. The Bank of Japan is not sitting still. It is taking action aggressively to ensure the smooth liquidity in the financial market,” said Masatoshi Sato, a strategist at Mizuho Investors Securities Co. Ltd.
South Korea’s Kospi rose 0.5 per cent to 1,169.95, while Shanghai’s benchmark Composite Index added 0.2 per cent to 2,223.73.
Australia’s benchmark S&P/ASX 200 dipped 0.2 per cent to 3,446.3 after miner Rio Tinto dropped 8.7 per cent on worries over its deal with Aluminum Corp. of China.
Wall Street got a surprise boost Tuesday, posting its fifth gain in six trading sessions, from a government report that home construction picked up in February. The news, which was unexpected, injected new vitality into a week-old rally.
Asian markets also have advanced strongly in recent sessions on signs of improvement among major U.S. and European banks. But many analysts are cautious and believe the rally has run its course for now.
“The rebound has almost reached its limit,” said Castor Pang, an analyst at Sun Hung Kai Financial in Hang Seng, noting that turnover in most markets is not rising quickly enough to suggest a recovery.
Mainland China’s advance faltered toward the middle of the day. Major steel maker Baoshan Iron & Steel gained 0.9 per cent and airlines were mostly higher. But major banks fell back, with Bank of China slipping 0.8 per cent and Shanghai Pudong Development Bank falling 1.3 per cent.
The World Bank cut its forecast of China’s 2009 growth from 7.5 per cent to 6.5 per cent due to plunging exports. But World Bank economists expressed confidence in Beijing’s ability to keep the world’s third-largest economy expanding amid global turmoil.
“We see China as a relative bright spot in a rather gloomy global economic picture,” said David Dollar, the bank’s country director for China.
U.S. stock futures indexes were down modestly, pointing to a lower open on Wall Street Wednesday.
Dow futures were down 18 points, or 0.2 per cent, while S&P 500 futures were down 1.8 points, also 0.2 per cent.
Oil prices fell in Asian trading, with benchmark crude for April delivery falling 52 cents to US$48.64 a barrel by midday in Singapore on the New York Mercantile Exchange.
