Asia stocks rise on hopes Fed to maintain stimulus
Oct. 30, 2013
MANILA, Philippines (AP) — Asian stocks rose Wednesday after the Dow Jones industrial average hit an all-time high on expectations the Federal Reserve will keep its economic stimulus fully in place until next year.
Japan's Nikkei 225 was up 1.1 percent at 14,477.57 and Hong Kong's Hang Seng climbed 0.8 percent to 23,037.05.
China's Shanghai Composite was up 0.8 percent at 2,144.84. Most other indexes in the region also recorded gains except for Malaysia and Indonesia, which reversed by midday.
The Fed is in the middle of a two-day policy meeting at which it's expected to maintain monthly bond purchases of $85 billion that are aimed at stimulating economic growth by keeping borrowing rates very low. The Fed will release its policy statement Wednesday afternoon.
The U.S. central bank's cheap money policy has underpinned stock markets worldwide for several years. Markets had been roiled by expectations that the Fed would begin reducing its stimulus this year but weaker U.S. hiring and other economic indicators have built a case for "tapering" of the bond purchases to be delayed until next year.
"The idea being priced in is that tapering might not come in December but possibly even in March next year so that is another issue that drives markets higher," said Herald van der Linde, Hong Kong -based head of Asia equity strategy at HSBC.
"And then there are more regional issues at play, in particular China's plenum coming up in the first part of November, so reform will be announced and that's something that could excite the Chinese market a little bit," he said.
On Tuesday, the Dow Jones industrial average rose 111.42 points, or 0.7 percent, to 15,680.35. The Dow also got a boost from IBM, which announced it would buy back $15 billion of its own stock.
The Standard and Poor's 500 index rose 9.84 points, or 0.6 percent, to 1,771.95, its seventh record high this month.
About half the companies in the S&P 500 have reported earnings for the third quarter. So far, most are doing better than investors expected. Companies in the index are forecast to log third-quarter earnings growth of 4.5 percent, according to data from S&P Capital IQ.
In energy trading, benchmark crude for December delivery was down 58 cents at $97.62 in electronic trading on the New York Mercantile Exchange. The contract dropped 48 cents to settle Tuesday at $98.20.
In currencies, the euro fell to $1.3740 from 1.3745 Tuesday. The dollar fell to 98.16 yen from 98.19 yen.