Asia stocks gain on hopes Fed stimulus to stay
HONG KONG (AP) — Markets from Sydney to Beijing rallied for a second day Thursday after the U.S. said quarterly growth may be weaker than expected, raising investors’ hopes that the Federal Reserve would delay plans to wind down its stimulus program.
Japan’s Nikkei 225 rose 1.9 percent to 13,081.01 and Hong Kong’s Hang Seng gained 1.5 percent to 20,648.81. South Korea’s Kospi surged 3 percent to 1,836.36.
The Shanghai Composite Index advanced 1.2 percent to 1,976.15 and the smaller Shenzhen Composite Index rose 1.3 percent to 913.87. Australia’s S&P/ASX 200 gained 1.9 percent to 4,821.00. Benchmarks in New Zealand, Singapore and Taiwan also rose.
The U.S. government cut its estimate for second-quarter economic growth to 1.8 percent, down sharply from 2.4 percent because of lower than predicted consumer spending.
While news of the weakness in the world’s biggest economy was disappointing, it was also positive for investors, who were rattled last week after Fed Chairman Ben Bernanke said the U.S. central bank would slow its bond-buying program if the U.S. economy continues to strengthen. That program has kept interest rates low and made stocks more attractive.
“This doesn’t put a new spin on the outlook but it certainly makes one wonder all the more about the Fed’s ‘new and improved’ outlook for 2014,” economists at DBS Bank wrote in a commentary.
Benchmark oil for August delivery was up 55 cents to $96.05 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 18 cents to end at $95.50 a barrel on Wednesday.
In currencies, the euro rose to $1.3029 from $1.3012 late Wednesday in New York. The dollar rose to 97.76 yen from 97.74 yen.