Asian stocks up on hopes Fed will de­lay rate rise

The China Post - - BUSINESS INDEX & - BY DANIEL LEUSSINK AND ROLAND JACK­SON

Asian eq­uity mar­kets were higher Mon­day af­ter a weak U.S. jobs re­port fu­eled spec­u­la­tion that the world’s num­ber one econ­omy is not ready for an in­ter­est rate rise any time soon.

The pos­i­tive move­ment also fol­lowed news that of­fi­cials ne­go­ti­at­ing an am­bi­tious Pa­cific trade pact were inch­ing closer to an­nounc­ing a deal.

Mar­kets across Asia tracked Fri­day’s surge on Wall Street af­ter a Septem­ber un­em­ploy­ment re­port in­creased the like­li­hood the U.S. Fed­eral Re­serve will keep key in­ter­est rates near zero for longer.

A rate hike de­lay would give global stock mar­kets some breath- ing space af­ter suf­fer­ing their worst quar­ter since 2011, an­a­lysts said.

“The Fed is ex­tremely un­likely to be­gin pol­icy nor­mal­iza­tion as soon as this month and De­cem­ber is look­ing ten­u­ous too,” Philip Borkin, a se­nior economist in Auck­land at ANZ, said in a client note.

Hong- Kong listed Glen­core soared af­ter re­ports it is seek­ing buy­ers for its agri­cul­ture busi­ness, jump­ing 72 per­cent at one point.

In­vestors are also eye­ing up­com­ing cen­tral bank meet­ings in Aus­tralia and Ja­pan.

Spec­u­la­tion is grow­ing that an eco­nomic down­turn in Ja­pan will force pol­i­cy­mak­ers in Tokyo to in­crease stim­u­lus mea­sures.

Talks on the Trans-Pa­cific Part­ner­ship, which, if suc­cess­ful will cre­ate the world’s largest free trade zone, were ex­tended to Mon­day, as the 12-na­tion bloc pushed to get a long-awaited deal. But ear­lier in the day, Ja­pan’s Econ­omy Min­is­ter Akira Amari told re­porters “ma­jor progress” had been made.

“We are mak­ing prepa­ra­tions now to an­nounce a deal in prin­ci­ple this af­ter­noon,” Amari said, ac­cord­ing to a trans­la­tion of his re­marks supplied by Ja­panese jour­nal­ists.

Wall Street Rally

Re­gional play­ers were given a pos­i­tive lead from New York, where the three main in­dices ended last week with strong gains.

The Dow climbed 1.23 per­cent, the S&P 500 jumped 1.43 per­cent and the Nas­daq gained 1.74 per­cent.

In Asian mar­kets Mon­day Tokyo closed 1.58 per­cent, or 280.36 points, higher at 18,005.49, while Syd­ney added 98.5 points, or 1.95 per­cent, to 5,150.5 de­spite lower vol­umes due to a public hol­i­day in New South Wales state.

Seoul fin­ished 0.44 per­cent higher, led by phar­ma­ceu­ti­cals and food man­u­fac­tur­ers, gain­ing 8.57 points to close at 1,978.25.

Hong Kong stocks had added 1.32 per­cent by mid-af­ter­noon, ex­tend­ing a rally from last week, af­ter a re­port said main­land China’s gov­ern­ment will roll out more fi­nan­cial poli­cies to sup­port Ma­cau.

Shang­hai was closed for a public hol­i­day.

The World Bank on Mon­day cut its growth fore­casts for de­vel­op­ing economies in East Asia and the Pa­cific but al­layed fears of a hard land­ing for China’s slow­ing econ­omy.

Euro­pean Eq­ui­ties Re­bound

Euro­pean stock mar­kets re­bounded Mon­day, af­ter hefty gains else­where, as weak U.S. data fu­eled talk the U.S. Fed­eral Re­serve would not hike in­ter­est rates any time soon.

Lon­don’s FTSE 100 in­dex jumped 2.03 per­cent to 6,254.40 points near­ing mid­day in the Bri­tish cap­i­tal.

In the eu­ro­zone, Frank­furt’s DAX 30 won 2.11 per­cent to 9,754.90 points and the Paris CAC-40 ral­lied 3.17 per­cent to 4,600.30 com­pared with Fri­day’s close.

In for­eign ex­change trad­ing, the Euro­pean sin­gle cur­rency rose to US$1.1271, up from US$1.1219 late in New York on Fri­day.

Asian in­dices also tracked Fri­day’s surge on Wall Street af­ter a Septem­ber un­em­ploy­ment re­port in­creased the like­li­hood the U.S. Fed­eral Re­serve will keep key in­ter­est rates near zero for longer than pre­vi­ously thought.

A rate hike de­lay would give global stock mar­kets some breath­ing space af­ter suf­fer­ing their worst quar­ter since 2011.

“Mar­kets had been an­tic­i­pat­ing that the Fed­eral Re­serve would raise rates in De­cem­ber, but Fri­day’s very weak em­ploy­ment num­bers may have thwarted any chance of a 2015 rate rise,” said Re­becca O’Keeffe, head of in­vest- ment at online stock­bro­ker In­ter­ac­tive In­vestor.

U.S. job growth fal­tered in Septem­ber and the la­bor mar­ket weak­ened across the board, the La­bor Depart­ment said.

The U.S. econ­omy added a dis­ap­point­ing 142,000 jobs in Septem­ber, well be­low an­a­lyst es­ti­mates of 205,000.

The prospect of ris­ing in­ter­est rates tends to send mar­kets lower be­cause they in­crease loan re­pay­ments for busi­nesses, while slash­ing dis­pos­able in­comes for con­sumers.

“Share prices across the world have bounced strongly from Fri­day’s lows on the prospect that the Fed’s in­tended rate hike may now be post­poned un­til 2016,” added O’Keeffe.

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