Log In | Register
BANGKOK — Asian stock markets advanced Thursday after the U.S. Federal Reserve said the world's largest economy is shrinking at a slower pace and scotched fears of an inflation threat, underpinning investor hopes for recovery. European shares opened lower.
Benchmarks in Japan and Hong Kong gained 2 percent or more in the wake of the U.S. central bank's much anticipated policy statement but trading volume was thin, reflecting doubts that the massive rally in global markets since March can be sustained.
Asian investors also took heart from figures showing that new orders for durable goods like household appliances rose 1.8 percent for the second straight month in May — three times more than anticipated — with strength seen across all major industries.
The Fed left its main lending rate unchanged at between zero and a quarter percent, as expected, and said the pace of contraction in the U.S. economy appears to be slowing.
It also said price increases will "remain subdued for some time," providing an antidote to fears that government stimulus spending and unprecedented injections of liquidity into the financial system will spark inflation that chokes off any recovery by requiring higher interest rates.
"The message seems to be that the economy has passed through the trough but it's a very deep trough," said Song Sen Wun, head of research at CIMB in Singapore.
"Markets are still very fragile and easily swayed by how the latest news is interpreted," he said. "One day the glass is half full, the next day it's half empty."
As trading got under way in Europe, Britain's FTSE 100 was down 0.4 percent at 4,264.72, while France's CAC 40 slid 0.5 percent to 3,168.67, and Germany's DAX lost 0.9 percent to 4,793.41.
U.S. stock index futures were higher, suggesting Wall Street would gain Thursday. Dow futures were up 45 points, or 0.6 percent, to 8,301 while S&P futures were up 6.4 points, or 0.7 percent, to 904.4.
Earlier in Asia, Japan's Nikkei 225 stock average rose 205.76 points, or 2.2 percent, to 9,796.08, helped by the yen weakening against the dollar, which can boost profits of Japanese exporters.
Hong Kong's Hang Seng jumped 382.88, or 2.1 percent, to 18,275.03 and South Korea's Kospi gained 2.1 percent to 1,392.73 amid reports the government was forecasting a shallower recession this year.
Elsewhere, Australia's benchmark gained 1.3 percent, China's Shanghai index inched up 0.1 percent and Singapore's market rose 1 percent.
Technology shares gained in Asia after U.S. software giant Oracle Corp. reported better-than-expected earnings for its fiscal fourth quarter. Toshiba advanced 2.6 percent in Tokyo and Samsung Electronics rose 1.4 percent in Seoul.
China's largest oil refiner Sinopec gained percent 0.4 percent in Hong Kong after saying late Wednesday it will buy Geneva-based oil explorer Addax Petroleum for $7.2 billion.
Wall Street closed mixed Wednesday. The Dow Jones industrial average fell 23.05, or 0.3 percent, to 8,299.86, while the Standard & Poor's 500 index rose 0.7 percent to 900.94. The tech-heavy Nasdaq composite index rose 1.6 percent to 1,792.34.
Oil prices rose modestly to just above $69 a barrel in Asia amid mixed signals about crude demand from a weekly U.S. inventory report. Benchmark crude for August delivery was up 50 cents to $69.17 a barrel by midday Singapore time in electronic trading on the New York Mercantile Exchange.
In currencies, the dollar rose to 96.31 yen from 95.67 yen late Wednesday and the euro gained to $1.3971 from $1.3943.
