Clean sweep for bulls in Asia

Markets extend gains on ideas of persistently supportive central banking action

Asian markets shot higher today, extending the rally witnessed in the last session as strong overnight cues and ideas that U.S. Federal Reserve would be bringing back its quantitative easing measures pushed the indices up around the region. A stronger than expected reading on U.S. service sector activity also helped to drive the major averages to multi-month closing highs. The US stocks rallied yesterday and the Dow closed at a five-month closing high while the Nasdaq and the S&P 500 reached their best closing levels in well over four months.



The International Monetary Fund, in its latest World Economic Outlook report, has projected that the Indian economy will grow by 9.7% in 2010 and 8.4% in the next fiscal, mainly driven by robust industrial production and macro-economic performance. The IMF also indicated that China is expected to grow at an even faster rate of 10.5% in 2010 and 9.6% in 2011, driven by domestic demand. On the other hand, advanced economies are projected to grow by just 2.7% in 2010 and 2.2% in 2011, the report said.

Global monetary policy was in focus yesterday, as the Bank of Japan cut its benchmark interest rate to almost zero as it seeks to revive a faltering recovery. Under pressure from the government, the BOJ cut rates to 0.0-0.1 percent from 0.1 percent. The central bank also unveiled its intent to purchase up to 5 trillion yen, or $60 billion, in government bonds, treasury bills and corporate bonds in an effort to weaken the local currency and improve liquidity in the world's third largest economy.

In Japan, the stocks went up for a second consecutive day as the effect of the BOJ moves continued to lift market confidence. The major index linked counters in financials as well as export related issues gained amid strong overnight cues from the US markets. The Bank of Japan outlined a new temporary 5-trillion-yen fund on its balance sheet to buy government debt and other assets including real-estate trusts (REIT's)to boost the economy and combat deflation. The benchmark Nikkei 225 index went up 1.81% at 9,691 hitting a two-month closing high, and the broader Topix index of all First Section issues on the Tokyo Stock Exchanged added 1.42% to 844.

In Australia, strong global cues and a massive array of gains in the commodity prices supported the stocks and the market shot up to a five-day high on closing basis. With nothing much on the economic calendar, the global risk appetite drove the market moods and the Australian stocks rallied 1.7 percent clocking their biggest gain in five weeks. The benchmark S&P/ASX 200 index clocked 80 points or 1.7% at 4,687, led by broad-based gains in the resource sector as global commodities prices soared sharply with copper nearing two year highs and crude oil testing five month highs.

In Mumbai, firm global stocks and sustained buying by foreign funds helped key benchmark indices clock decent gains after a small decline in last session. The market breadth was strong. Barring the BSE FMCG index, all the other sectoral indices on BSE rose. FMCG stocks reversed initial gains. Metal, auto, consumer durables and realty stocks rose. As per provisional figures, the BSE 30-share Sensex was up 119.22 points or 0.58% to 20,526.93. The index surged 262.24 points at the day's high of 20,669.95 in early trade. The S&P CNX Nifty was up 34.45 points or 0.56% to 6,180.25 as per provisional figures.

In other markets, the Straits Times index in Singapore added 0.28%, Hang Seng index in Hong Kong soared 1.07% while the TSEC index in Taiwan also rallied 1.02%. DOW futures gained though some moderation was witnessed in the afternoon trade. The DOW us likely to open up 26 points from the previous close. Commodities were in sublime touch. Light sweet crude oil futures for November delivery hit a five-month high of $83.33 per barrel and currently quotes at $82.52, down 30 cents from the previous close. Gold hit a fresh all time high of $1351 per ounce.