Asia markets rally on stimulus hopes

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HONG KONG: Asian markets mostly rose on Thursday following a fresh Wall Street record as traders are pumped up by strong corporate results and expectations of fresh stimulus.

After a slight stumble Tuesday and Wednesday caused by profit-taking, the equities rally resumed with Tokyo again leading the pack following a report that Japan is planning a new, giant stimulus program.

Prime Minister Shinzo Abe is eyeing a package of at least 20 trillion yen—about double the size initially expected—to kickstart the economy from years of slumber and light a fire under torpid inflation, Kyodo News agency said.

The likelihood of more yen flooding financial markets sent the currency tumbling, which in turn boosted stocks, particularly exporters who benefit from a weaker unit.

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The Nikkei ended 0.8 percent higher, with the dollar climbing to 107.22 yen from 106.87 yen in New York, and well up from the 100 yen levels seen before the US released blockbuster jobs data at the start of the month. The euro rose to 118.37 yen from 117.72 yen.

Other stock markets followed suit, with Hong Kong rising 0.5 percent to end above 22,000 for the first time since December 24.

Shanghai climbed 0.4 percent, Sydney added 0.4 percent and Wellington added 0.6 percent while Taipei was 0.5 percent higher. However, Seoul eased 0.2 percent.

The advances follow a positive lead from Wall Street, where the Dow and S&P 500 closed at all-time highs on the back of a string of upbeat earnings reports and outlooks from big-name firms such as Microsoft, Intel and Morgan Stanley.

“We have better corporate earnings, likely bold fiscal stimulus in Japan, zero interest rates helping to absorb every macro shock we hear about and broad monetary easing,” Chris Weston, chief market strategist at IG Ltd in Melbourne, told Bloomberg News.

“If equity markets can’t rally in this environment they never will and really the key concern holding back fresh capital is significantly elevated valuations.”

Next on the agenda is the European Central Bank’s policy meeting later in the day, after which boss Mario Draghi is expected to promise to provide back-up in the event of any fallout from Britain’s decision last month to leave the EU.

The meeting comes days after the International Monetary Fund cut its global growth forecast, citing the uncertainty created by the shock European Union exit vote.

In early European trade London dipped 0.1 percent but Frankfurt added 0.5 percent and Paris rose 0.1 percent.

AFP

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