Fed Boost Buoys Asia

Regional benchmarks take heart from the Federal Reserve's plan to buy $600 billion in government bonds

Asian markets edged higher today, rallying in tune with the optimism spurred in the risky assets from the US Federal Reserve's plan to buy $600 billion in government bonds in an effort to inject life into the faltering U.S. economy. US dollar depreciated and the commodity prices rallied on ideas that continued flow of liquidity on the global front would help keep momentum well supported for the risky assets. US stocks rose yesterday after the Fed said it would buy $75 billion in Treasury bonds per month through the middle of next year. The Dow Jones industrial average rose 26.41 points, or 0.2 percent, to 11,215.13, the highest close in two years following the Fed statement.



Japanese stocks jumped today, playing catch-up with regional markets after Wednesday's holiday. Positive cues from the US markets overnight supported the equities despite the worries on the Japanese economic front. The benchmark Nikkei 225 added 198.80 points, or 2.17% to close at 9358.78. Japan's economic recovery faces downside risks from currency moves and worries about a downturn in overseas economies; media reports quoted Japanese Finance Minister Yoshihiko Noda saying earlier in the week. Japan's economy is at a standstill, following recovery from recession with the help of export demand from Asia, but the economy is expected to continue growing as overseas economies improve, Noda said in parliament, according to the text of a speech.

In Australia, stocks closed at a fresh six-month closing high as the US stimulus package boosted investor sentiment around the region. Commodity plays were stronger with crude, copper and Gold soaring following the renewed sell off in dollar after the last night's Fed announcement. Index leader BHP Billiton was one of the biggest drivers, rising 2.6% to $43.72. The Canadian government has rejected BHP's bid for the world's largest fertilizer company Potash, but at the same time left the door open for further negotiations. Investors are now speculating BHP could launch a share buy-back. The benchmark S&P/ASX 200 index added 22.7 points, or 0.5% to end at 4745.3 points.

In China, stocks rose to a seven-month high on the back of gains in raw-material producers and a bounce back in banks. The recent sell off owing to the excess worries about a tightening of the monetary policy provided a good buying opportunity for the investors who eyed at the strong economic numbers out off late. The benchmark Shanghai Composite Index rose 55.95 points or 1.85% to close at 3,086.94.

In Mumbai, the Key benchmark indices continued their uptrend, with the barometer index BSE Sensex hitting its highest level in nearly 34 months in mid afternoon trade as global stocks surged after US Federal Reserve's decision to buy $600 billion in government bonds to stimulate the US economy. A rally in Coal India shares on its debut on the bourses today, 4 November 2010, good Q2 September 2010 results and sustained buying by foreign funds, and data showing easing food inflation in late October 2010, underpinned sentiment. Index heavyweight Reliance Industries surged. The BSE 30-share Sensex was up 427.93 points or nearly 2% to 20,893 points- hitting its 34 month high.

In other markets, the Hang Seng index in Hong Kong added 1.62%, the Straits Times index in Singapore gained 0.48% while the TSEC index in Taiwan rallied 0.77%. The US dollar plummeted to nearly one-year lows, adding to the massive losses post the FOMC. The greenback was last seen quoting at 1.4238 against the Euro. Benchmark crude for December delivery was up 1-dollar at $85.69 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 79 cents to settle at $84.62 a barrel Wednesday. Gold shot up above $1360, currently quoting at $1361.40, up $23.80 per ounce from the previous close.