ECB speculation sends Asia stocks surging; euro sinks
HONG KONG: The European Central Bank’s (ECB) hint at fresh stimulus measures for the stuttering eurozone economy sent Asia stock markets and emerging currencies surging on Friday, while the euro held on to losses.
Regional investors were set to end another week on a positive note, extending an October rally that has been fuelled by hopes for more monetary easing from key central banks, including in the United States, China and Japan.
The gains come after global markets suffered their worst quarter in four years during July-September, owing to worries about the Chinese economy.
After its latest policy meeting on Thursday, the ECB unveiled no new measures, but its head Mario Draghi said: “The degree of monetary policy accommodation will need to be re-examined at our December meeting.”
ramp up its already vast bond-buying scheme— essentially printing more cash—in a bid to torpid growth.
market, the single currency plunged Thursday to $1.1111 and 134.10 yen in New York, well down from $1.1339 and 135.65 yen in Asia earlier in the day.
And on Friday in Tokyo the unit bought $1.1115 and 134.15 yen.
It also fuelled a rally in equities, with Frankfurt and Paris surging more than two percent while all three main indexes on Wall Street also enjoyed healthy gains.
as Tokyo ended 2.11 percent higher, Sydney gained 1.67 percent and Seoul tacked on 0.86 percent. Hong Kong added 1.34 percent. Shanghai closed 1.30 percent higher.
‘Early Christmas present’
“Mario Draghi and his elves at the ECB practi- present in order for the European economy on 3 December,” Evan Lucas, a market strategist at IG, said in an email to clients.
“In short, all options are on the table for the ECB, also meaning the Bank of Japan and the Fed are now live events as well.”
Speculation the Federal Reserve will put off an expected interest rate hike until next year has gained traction over the past month as bank policymakers fret over the weak global economic outlook.
A growth slowdown in China and ongoing troubles in Japan’s economy have also exacerbated talk that those countries will soon announce more measures, feeding a rally in
Traders are keeping an eye on China, where the country’s leaders are preparing for a toplevel policy meeting—or plenum—next week, with talk of measures to reform the sprawling
Gerry Alfonso, a sales trader at Shenwan Hongyuan Group in Shanghai, said: “The market expectation is that the plenum will continue with its policies to support the economy, particularly in strategically important sectors.
“The authorities seem determined to support the economy and that’s clearly giving
The likelihood that monetary policy will remain more accommodative for borrowers supported high-yielding, riskier, assets, such as emerging market currencies.
In morning trade, the Malaysian ringgit soared 1.40 percent and Indonesia’s rupiah gained 0.30 percent. The Australian dollar rallied 0.85 percent and Thai baht put on 0.35 percent while the Taiwan dollar was up 0.33 percent.
South Korea’s won surged 1.21 percent, with news that the country’s economy grew more than expected in July-September also providing strong support.