Asian stocks gain after Fed keep US interest rates low
Beijing, July 30 (AP): Asian stocks advanced Thursday after the US Federal Reserve left interest rates near zero to support a struggling economy.
Benchmarks in Shanghai, Tokyo, Hong Kong and Seoul all gained.
Lower interest rates and investor optimism about a possible coronavirus vaccine have helped global markets recover most of this year’s losses. But analysts say the recovery might be too early to be supported by uncertain economic activity as infection numbers rise in the United States, Brazil and other countries.
On Wednesday, Fed Chairman Jerome Powell warned that rising US cases, which have led some state governments to reimpose anti-disease measures, threaten the modest recovery from the pandemic.
The Fed said it would keep buying USD 120 billion of Treasury and mortgage bonds every month to encourage borrowing and spending, but Powell said Congress needs to take action. Legislators have yet to agree on aid after USD600 in weekly unemployment benefits for millions of Americans run out this week.
The current situation is all about money in consumer pockets, which is precisely why fiscal policy is so much more important,” Stephen Innes of AxiTrader Corp. said in a report.
The Nikkei 225 in Tokyo rose 0.1 per cent to 22,413.40 and the Shanghai Composite Index was off 0.1 per cent at 3,290.87.
The Hang Seng in Hong Kong gained 0.3 per cent to 24,951.85 despite data showing the territory’s economy shrank by 9 per cent in the quarter ending in June.
The Kospi in Seoul gained 0.2 per cent to 2,267.53 and Sydney’s S&P-ASX 200 added 0.6 per cent to 6,041.70. New Zealand advanced while Singapore and Jakarta retreated.
On Wednesday, the benchmark S&P 500 index rose 1.2 per cent to 3,258.44 in its biggest daily increase in two weeks. The S&P 500, which was down 34 per cent earlier, is back within 3.8 per cent of its February record.
The Dow Jones Industrial Average rose 0.6 per cent to 26,539.57. The Nasdaq composite added 1.4 per cent to 10,542.94.
Also Thursday, Japan reported retail sales rose by a better-than-forecast 13.1 per cent in June over the previous month.
That means retail sales in one of the world’s biggest markets were only 0.9 per cent lower than in February before the crisis hit, Tom Learmouth of Capital Economics said in a report.
In the United States, some companies are reporting quarterly results that exceed forecasts, though they still are well below pre-virus levels.
Advanced Micro Devices rose 12.5 per cent after it reported stronger profit than Wall Street expected. Starbucks gained 3.7 per cent after it reported a loss that wasn’t as bad as analysts were expecting.
Eastman Kodak surged 318.1 per cent, gaining for a second day after the company won a USD USD 765 million government loan to launch a new business unit making pharmaceutical components. Shares rose to USD 33.20 from USD 2.62 on Monday.
Amazon added 1.1 per cent Wednesday, Apple rose 1.9 per cent, Facebook gained 1.4 per cent and the Class A shares of Alphabet, Google’s parent company, were up 1.3 per cent.
Gold rose to USD 1,956.60 per ounce from Wednesday’s USD 1,953.40. It briefly touched USD 1,960 the previous day.
In energy markets, benchmark U.S. crude rose 2 cents to USD 41.29 per barrel in electronic trading on the New York Mercantile Exchange. The contract gained 23 cents on Wednesday to USD 41.27. Brent crude, used to price international oils, added 7 cents to USD 44.16 per barrel in London.
In currency dealings, the U.S. dollar was at 105.03 Japanese yen, up from 104.90 yen on Wednesday. The euro fell to USD 1.1783 from USD 1.1789.