HONG KONG: Asian markets rose on Wednesday after the new head of the US Federal Reserve said that she would stick with its stimulus, while lawmakers passed a bill to raise the debt ceiling and avert another painful Washington stand-off.
Wall Street rallied for a fourth straight session after Janet Yellen told Congress she expects to continue predecessor Ben Bernanke’s plan to gradually wind down its bond-buying and keep interest rates low until the jobs market improves significantly.
Tokyo rose 0.47 percent, Hong Kong added 0.52 percent, Shanghai was 0.15 percent higher, Sydney gained 0.31 percent and Seoul advanced 0.18 percent.
In her first testimony since taking the Fed chair on February 1, Yellen said that the world’s number one economy is expected to grow this year and next at a moderate pace, despite some recent poor data that has sparked fears of a slowdown.
Investors were reassured by her comments following turmoil on global markets for most of this month on fears over a flight of capital from emerging economies, after the Fed’s policy board said that it would reduce its stimulus by $10 billion a month to $65 billion—after a similar move in the previous meeting.
She said that when the Federal Open Market Committee meets again in March, it could weigh a pause to the taper if economic conditions show a significant deterioration.
“Yellen hit just the right note with the market, reassuring that there would be no major break with the existing policy, while remaining somewhat cautious,” said Hiroichi Nishi, SMBC Nikko Securities general manager of equities.
On Wall Street, the Dow jumped 1.22 percent, the S&P 500 put on 1.11 percent, and the Nasdaq added 1.03 percent.
Adding to the upbeat mood was news that Republicans in the House of Representatives had backed off another showdown and waved through a bill to increase the government’s debt limit until next March with no strings attached.
With the bill likely to pass the Democrat-heavy Senate, the move means Washington will avoid the partisan stand-off that has twice threatened to leave the US unable to pay its bills and default, hammering world markets. Vice President Joe Biden described the news as “a victory for the country.”
The mood was also buoyed by official data on Wednesday showing that China’s trade surplus rose 14 percent year-on-year in January to $31.86 billion, rebounding from a decline the previous month as exports jumped more than expected.