Asian stocks rose to a two-month high yesterday and high-yielding currencies advanced on the yen after details of a US plan to rid banks of up to US$1 trillion in toxic assets bolstered confidence in risk taking.
Major European stock market futures rose more than 1 percent, indicating higher openings, while US stock market futures were up 2 percent as a wave of optimism spread.
Still, doubts lingered, with the US housing market showing few signs of bottoming, uncertainty over how the bad debts would be priced and concerns whether more borrowing by over indebted households was the solution to a credit crisis.
“If the US authorities actually succeed in buying up to US$1 trillion of ‘toxic assets,’ it would be considered a significant step by the financial markets. However, the markets will be disappointed if the programs did not move forward due to problems regarding how the assets’ value is measured,” said Mamoru Yamazaki, chief economist with RBS Securities in Tokyo.
The Nikkei share average ended 3.4 percent higher, closing at the highest level since late January as technology stocks soared.
Shares in Japan’s big banks outperformed. Mizuho Financial Group rose 5.3 percent and Mitsubishi UFJ Financial Group, the country’s biggest bank, gained 4.7 percent. MUFG said earlier it would cut 1,000 jobs.
The MSCI index of Asia Pacific stocks outside Japan was up 4 percent, hitting a two-month high, supported mostly by the energy, financial and materials sectors.
Hong Kong’s Hang Seng index rose 3.4 percent, led by a 5.3 percent gain in China Construction Bank (中國建設銀行). Index heavyweight HSBC slipped 2.5 percent as its deeply discounted rights shares began trading yesterday.
Australia’s S&P/ASX 200 Index and South Korea’s Kospi Index both rose 2.4 percent. All markets gained except Vietnam and New Zealand.
The details yesterday took away some of the mystique as to how the US Treasury Department would get that done. However, questions lingered as to whether this plan was the antidote to the monstrous problem that has ultimately sucked the global economy into recession.
“The key to the success of all these initiatives is the ability and willingness of corporations and US households to borrow. Households, especially, are still over-leveraged. The solution to that is to save more out of current income and use the savings to repay debt. But, lower interest rates incentivise borrowings and not savings,” said V. Ananthan-Nageswaren, chief investment officer, Asia Pacific, with Julius Baer in Hong Kong.
For now at least, investors were given the green light to venture back into riskier assets.
Currencies that were sold off heavily during the most violent periods of market volatility performed well. The Australian dollar rose more than 1 percent to around A$0.6980, a two-month high.
Meanwhile, the euro hit a five-month high against the yen, near ¥132, following remarks by European Central Bank president Jean-Claude Trichet underscoring that rates were already at low levels and that the central bank may turn to unconventional measures to shore up the banking system.
Intel Corp chief executive officer Lip-Bu Tan (陳立武) is expected to meet with Taiwanese suppliers next month in conjunction with the opening of the Computex Taipei trade show, supply chain sources said on Monday. The visit, the first for Tan to Taiwan since assuming his new post last month, would be aimed at enhancing Intel’s ties with suppliers in Taiwan as he attempts to help turn around the struggling US chipmaker, the sources said. Tan is to hold a banquet to celebrate Intel’s 40-year presence in Taiwan before Computex opens on May 20 and invite dozens of Taiwanese suppliers to exchange views
Application-specific integrated circuit designer Faraday Technology Corp (智原) yesterday said that although revenue this quarter would decline 30 percent from last quarter, it retained its full-year forecast of revenue growth of 100 percent. The company attributed the quarterly drop to a slowdown in customers’ production of chips using Faraday’s advanced packaging technology. The company is still confident about its revenue growth this year, given its strong “design-win” — or the projects it won to help customers design their chips, Faraday president Steve Wang (王國雍) told an online earnings conference. “The design-win this year is better than we expected. We believe we will win
Chizuko Kimura has become the first female sushi chef in the world to win a Michelin star, fulfilling a promise she made to her dying husband to continue his legacy. The 54-year-old Japanese chef regained the Michelin star her late husband, Shunei Kimura, won three years ago for their Sushi Shunei restaurant in Paris. For Shunei Kimura, the star was a dream come true. However, the joy was short-lived. He died from cancer just three months later in June 2022. He was 65. The following year, the restaurant in the heart of Montmartre lost its star rating. Chizuko Kimura insisted that the new star is still down
While China’s leaders use their economic and political might to fight US President Donald Trump’s trade war “to the end,” its army of social media soldiers are embarking on a more humorous campaign online. Trump’s tariff blitz has seen Washington and Beijing impose eye-watering duties on imports from the other, fanning a standoff between the economic superpowers that has sparked global recession fears and sent markets into a tailspin. Trump says his policy is a response to years of being “ripped off” by other countries and aims to bring manufacturing to the US, forcing companies to employ US workers. However, China’s online warriors
RSS