HONG KONG, China – Asian markets surged Friday after the US Federal Reserve said it would unleash a huge open-ended bond-buying programme aimed at jumpstarting growth and boosting jobs in the world’s largest economy.
The news lifted the euro well past $1.30, but Japanese authorities expressed concern that a flood of cheap dollars would further strengthen the yen, which hit a seven-month high against the greenback late Thursday.
Tokyo shares rose 1.83%, or 164.24 points, to 9,159.39, Seoul soared 2.92%, or 56.89 points, to 2,007.58 and Sydney jumped 1.17%, or 50.6 points, to 4,390.0.
In afternoon trade Hong Kong rocketed 2.88% and Shanghai added 1.09%.
Meanwhile, Taipei climbed 2.10%, or 159.25 points, to 7,738.05. And Taiwanese-based smartphone maker HTC was up by its 7.0% daily limit at Tw$296.5.
Asia cheers for America’s third quantitative easing
After a two-day meeting, the policy committee of the central bank said it would start a third programme of purchasing $40 billion a month in mortgage-backed bonds, known as quantitative easing (QE3).
It said it would continue its monetary easing efforts until it saw substantial improvement in the jobs market.
The bank added that it would also extend its “Operation Twist” scheme of selling short-term debt and buying long-term bonds with the proceeds in order to keep long-term interest rates as low as possible.
While the announcement had been expected, dealers cheered the fact that the central bank said it will continue with the policy until it feels the economy is strong enough.
“This is action aimed at helping (what is) by far the most important economy in the world,” said Joe Bracken, head of macro strategies at BT Investment Management in Sydney.
“Anything that puts the US economy on the right track is greeted with applause in Asia because it’s a market they all export to.”
On Wall Street, investors went into a buying frenzy, sending the Dow surging 1.55%, the S&P 500 rallied 1.63% and the Nasdaq climbed 1.33%.
The move comes a week after the European Central Bank said it would buy unlimited amounts of debt from under pressure eurozone nations in a bid to lower their borrowing costs, which had reached dangerous levels.
“There is no doubt that this is an extremely significant point. The open-ended nature of the plan is just extraordinary,” said James White, senior analyst at First State Investments in Sydney.
Currency market and oil prices respond
On currency markets the euro rose to $1.3023, its highest since May, while it was also at 101.10 yen, compared with 100.61 yen in New York.
And the dollar was at 77.62 yen from 77.48 yen in the United States, where it sank at one point to a seven-month low of 77.13 yen.
The US unit was given support by concerns Japanese authorities would step in to weaken the yen.
Finance Minister Jun Azumi said he would not rule out any policy options to fight excessive moves in the yen, which hurts exporters when it rises too much.
Traders also said the central bank carried out a rate check with several lenders during New York trade, the first since June, Dow Jones Newswires said.
After checking the yen exchange rate with several banks, the bank of Japan could immediately follow with an intervention.
Oil prices rose. New York’s main contract, light sweet crude for delivery in October surged 91 cents to $99.22 a barrel in the afternoon and Brent North Sea crude for November delivery added 63 cents to $116.51.
Gold was at $1,775.10 at 0610 GMT compared with $1,730.63 on September 13. – Agence France-Presse
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