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Asia shares surge after Wall St rally

Monday, October 20, 2014 - 16:32
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Asian markets rallied Monday following a rise in New York at the end of last week, with Tokyo surging almost four percent thanks also to a weaker yen. - PHOTO: BLOOMERG

[Hong Kong] Asian markets rallied Monday following a rise in New York at the end of last week, with Tokyo surging almost four percent thanks also to a weaker yen.

However, while the gains will come as some relief after the ups and downs of last week, traders are nervously watching the release of Chinese economic growth data later in the week for fear of another weak figure.

Tokyo, which ended last week at a five-month low, raced 3.98 per cent higher in the biggest one-day points gain since June 2013. It added 578.72 points to finish at 15,111.23.

Sydney jumped 0.90 per cent, or 47.7 points, to 5,319.4 and Seoul added 1.55 per cent, or 29.40 points, to 1,930.06.

Shanghai finished 0.66 per cent higher, adding 15.54 points, to 2,356.73, and Hong Kong put on 0.20 per cent, or 47.05 points, to end at 23,070.26.

Investors took their lead from Wall Street, where the three main indexes saw healthy advances Friday on bargain-buying and following upbeat earnings reports from General Electric and Morgan Stanley.

The Dow added 1.63 per cent, the S&P 500 jumped 1.29 per cent and the Nasdaq gained 0.97 per cent.

Adding to buying sentiment were comments from officials at the US and British central banks.

On Thursday James Bullard, head of the St Louis branch of the Federal Reserve, suggested it could extend its bond-buying programme rather than winding it down, as had been expected.

And on Friday Bank of England chief economist Andrew Haldane said recent economic weakness implied the need for a slower approach to raising rates.

The two banks have in the past few months been considering raising interest rates as their respective economies have slowly been picking up. However that has spooked traders as other economies, including the eurozone, China and Japan, have been struggling.

There was also support from reports at the weekend that China's central bank plans to inject 200 billion yuan (US$32.6 billion) into the banking system after a recent spate of monetary easing failed to kickstart the Asian economic giant.

On foreign exchange markets the dollar climbed to 107.10 yen, compared with 106.78 yen in New York and well up from the 106.22 yen earlier Friday in Asia.

The euro fetched 136.66 yen against 136.28 yen in US trade, while it was at US$1.2768 compared with US$1.2759.

However, there are still ongoing worries about the world economy.

Naoki Fujiwara, fund manager at Shinkin Asset Management, said: "Global markets, faced with renewed slowdown fears, are far from stable, and will only recover if and when economic growth data and policy directives are reassuring enough to entice investors out of their current 'risk-off' mode. Stock prices are cheap, but can get cheaper still." Eyes are now on China, which releases third-quarter gross domestic product data Tuesday. There are expectations for another weak reading following a recent string of underwhelming reports, including on industrial output, inflation and trade.

"There is a broad consensus that growth decelerated to its slowest pace since the Great Recession," said Credit Agricole.

"China activity data, especially Q3 GDP, are unlikely to bring much cheer to nervous markets." Oil prices enjoyed some more minor gains, although they are still sitting at multi-year lows. US benchmark West Texas Intermediate for delivery in November climbed 44 US cents to US$83.19 a barrel in afternoon trade, and Brent crude for December added two cents to US$86.18.

Gold was at US$1,242.35 an ounce against US$1,236.20 late Friday. AFP