Asian stocks rally on central bank offensive
Asia-Pacific stock markets extended a global rally Friday after the world’s most powerful central banks offered to inject US dollars into lenders squeezed by the eurozone debt crisis.
The European Central Bank and its US, Japanese, Swiss and British counterparts announced Thursday they would act in concert to lend dollars to banks facing a shortage of the American currency.
The move sent European stocks soaring and helped Wall Street stay in positive territory for the fourth day in a row, with the Dow Jones Industrial Average closing up 1.66 percent at 11,433.18.
Asian shares followed the lead. Japan’s Nikkei jumped 2.25 percent, or 195.30 points, to close at 8,864.16.
In Australia, the S&P/ASX 200 rallied 1.91 percent, or 77.7 points, to end at 4,149.4, while the broader All Ordinaries closed up 1.85 percent.
South Korea’s benchmark KOSPI index soared 3.72 percent, or 66.02 points, to 1,840.10 and Hong Kong rose 1.80 percent in the afternoon.
“What was good about the liquidity announcement is that the (European Central Bank) has got ahead of the game,” said CMC Markets chief market strategist Michael McCarthy.
“By acting decisively, they have averted what could have been a US dollar funding crisis.”
But the European debt crisis is still weighing on investors, Commsec market analyst Steven Daghlian said.
“Even when you take into account the gains we’ve seen over the past couple of days in Australia, the All Ords Index is still down about 14 percent this year and we lost about five percent in September, so we still have a long way to go,” Daghlian said.
The euro held on to gains it had clocked up in New York late on Thursday after plunging earlier this week.
It was fetching $1.3850 in afternoon Asian trade, compared with $1.3882 late Thursday in New York where the common European currency jumped after the move to aid Europe’s struggling banks.
The euro also stood at 106.35 yen from 106.40 yen in New York.
In Asia on Thursday the common currency had been sitting at $1.3720 and 105.20 yen, while on Monday it was foundering at around $1.3500 and a 10-year low below 104 yen.
The dollar bought 76.78 yen, slightly firmer than 76.66 in New York Thursday.
Safe haven gold was also losing its lustre as risk appetite picked up. At 0610 GMT, the precious metal was trading at $1,770.40 per ounce, well down from the $1,810.00 it sat at late Thursday.
It has suffered heavy selling since peaking at a record high $1,913.50 towards the end of last month.
On oil markets New York’s main contract, light sweet crude for delivery in October, was up seven cents to $89.47 in afternoon trade and Brent North Sea crude for October climbed 52 cents to $112.82.