Asia markets rally after strong US growth figures
Asia stocks extended their rally on Friday, taking heart from strong US growth figures to cement a recovery after a torrid week when global markets took fright over China s gloomy economic outlook.
Tokyo led the gains, with Hong Kong and Shanghai in tow, and oil prices zoomed higher after the US reported a surprisingly strong new estimate of economic growth in the second quarter.
The latest data, which showed the world s biggest economy grew at an annual rate of 3.7 percent in the April-June quarter, buoyed markets that have been worried over the prospects for China s economy, which accounts for some 13 percent of global output. "We end the week on another positive note, and the craziness we ve seen over the last couple of weeks seems to be dissipating," Chris Weston, chief markets strategist at IG Markets, said in a note.
Markets across the world saw recov- eries, with the S&P 500 surging to its second straight gain on Wall Street, while stock indexes in London and Paris also rose. In Asia, Tokyo closed 3.03 percent higher, while in afternoon trading, Hong Kong gained 0.51 percent and Shanghai was 3.69 percent higher.
The gains across key Asian bourses first began on Wednesday, when markets - - with the exception of Shanghai -- began to find their footing. The Chinese market made substantial gains the following day, however, indicating prices have, for the moment, found their floor.
The latest advances come as a relief to investors who at one point saw $8 trillion wiped off global markets in a two-week stock market rout led by fears over the outlook for China. Beijing has sought to mitigate those concerns in recent days by taking a series of measures, from boosting the amount its massive state pension fund can invest in stocks, cutting interest rates and slashing the amount of money banks need to hold in reserve.
The measures are not only aimed at increasing cash flow in China, but also at reviving confidence that Beijing can steer the economy away from a hard landing and keep global growth on course. Markets took their lead, however, from the US growth report, which, though it covered only through June, confirmed the economy has not yet been hit much by China s downturn. It added to other strong recent data on consumer confidence and durable goods orders. "The US economy continues to perform on a consistent basis... (showing) that its economic recovery is sustainable," said FXTM chief market analyst Jameel Ahmad.
Concerns in the recent stock market panic focused on the fact that in recent years China has been the main driver of global growth, with Europe in the doldrums and the United States struggling to maintain a recovery. But Chris Green, an Auckland-based strategist at First NZ Capital Ltd., said the figures showed the US economy was in better shape.