Business News

Asian stocks rally as US economy picks up

HONG KONG (APP/AFP) – Asian markets rose Thursday, led again
by Tokyo as the dollar strengthened against the yen on growing expectations the US will hike interest rates by the end of the year.
Another round of positive data out of Washington, this time on the
key services sector, reinforced opinions that the world’s top economy is back on track and able to deal with the impact of tighter borrowing costs.
“Data has been consistent with the Fed moving in December,” Chris
Green, the Auckland-based director of economics and strategy at First NZ Capital Group, said.
“The Fed has a delicate balancing act,” he told Bloomberg News. “They’d want to normalise rates as the economy improves but at the same time they don’t want to scare the financial system.”
US markets rallied Wednesday after the Institute for Supply Management said the services sector expanded at its fastest rate in almost a year in September, rebounding from the previous month’s slump.
The prospects of US rates tightening within three months has rallied
the dollar, which bought 103.47 yen in Tokyo — flat compared with late in New York but well up from the levels below 103 yen earlier Thursday in Asia.
Japanese exporters welcomed the weaker yen, sending the Nikkei in
Tokyo 0.6 percent higher by the break, putting it on the road to a fourth-straight gain.
Hong Kong added 0.3 percent, Sydney was 0.4 percent higher, Seoul put on 0.2 percent and Singapore gained 0.3 percent. Shanghai is closed for a week-long public holiday.
The greenback was also at three-decade highs against the pound, which
has been hammered this week after Prime Minister Theresa May set a timeline for Britain to exit the EU by 2019.
However, her comments suggesting she was not a fan of the Bank of England’s loose monetary policy of bond-buying provided some lift to sterling, which also managed to edged up against the euro slightly — though it is still at five-year lows.
The euro has also been given some lift by a report that the European
Central Bank is considering winding down its own stimulus programme.