Asian stocks edge up on possible U.S. rate cut
Asian stocks edge up on possible U.S. rate cut
SINGAPORE (Reuters): Holiday-thinned Asian equity markets were
mostly higher on Monday aided by expectations of further U.S.
rate cuts and some local factors.
Markets in Singapore, Indonesia, China, Thailand and Malaysia
were shut for a public holiday.
Shares in Tokyo finished higher after being weighed down
earlier as investors opted to take profits specifically in
technology shares upon returning from the Golden Week.
But the market climbed after new premier Junichiro Koizumi's
much-awaited policy speech.
"There's not much fresh stuff in the speech, it seems, but
hopes that economic reforms may finally come to Japan have
outweighed investors' urges to grab profits after last week's
strong gains," said Masatoshi Sato, equities manager at Mizuho
Investors Securities.
The Nikkei 225 Index closed up 107.77 points, or 0.75 percent
at 14,529.41.
Providing positive sentiment to the Asian equity markets was
the increasing likelihood the U.S. Fed would cut interest rates
by 50 basis points to spur growth at its next Federal Open Market
Committee meeting (FOMC) on May 15, analysts said
Fueling this view was the release on Friday of the worst
monthly U.S. jobs report for April in a decade.
Spillover from Wall Street was expected to lead to stronger
opening in the European courses with the healthcare sector in
focus after Switzerland's Novartis bought a strategic stake in
rival Roche
However, with the London stock exchange closed for a national
public holiday, trading in Europe overall is likely to be more
subdued than usual, traders said.
After initially being sold down, U.S. equities closed in
positive territory with the Dow Jones Industrial Average
finishing up 154.59 points or 1.43 percent, at 2,191.53 and the
technology-laced Nasdaq Composite Index ending up 45.33 points,
or 2.11 percent, at 2,191.53 points.
"The (initial) sell-off was caused by people feeling the
economy was weakening more than initially thought, but after
thinking about it, they see it could push the Fed to be
aggressive in cutting rates," said Joseph Stocke, a fund manager
at StoneRidge Investment Partners. "People are looking ahead six
to nine months when the economy will be recovering."
After Koizumi's speech, the yen rose against the dollar,
recovering from earlier selling pressure and was quoted around
121.20 yen from 121.70 earlier in the day.
The euro, meanwhile, was subdued as it held in a tight range
around 0.8915 against the dollar.
A rally in global banking giant HSBC Holdings and property
sectors underpinned the Hong Kong bourse.
HSBC was up after taking a beating late last week on
speculation it may make a bid for Merrill Lynch while property
counters were supported by renewed U.S. rate cut expectations.
At 0630 GMT (1 p.m. Jakarta time), the benchmark Hang Seng
Index was up 1.72 percent at 13,621.65.
Shares in Manila dipped on concerns about violence going into
next week's election prompting some light selling pressure.
The market remained nervous even though President Gloria
Macapagal Arroyo lifted the state of rebellion at midnight on
Sunday saying public order had been restored.
The main index closed down 0.73 percent at 1,431.91.