Friday, Sep 14, 2012
By Daniel Inman
Asian markets climbed on Friday after the U.S. Federal Reserve unveiled an open-ended bond buying plan Thursday to help the domestic economy, while the Bank of Japan gave further signals that it is concerned over the strength of the yen.
"This is action aimed at helping (what is) by far the most important economy in the world. Anything that puts the U.S. economy on the right track is greeted with applause in Asia because it's a market they all export to," said Joe Bracken, head of macro strategies at BT Investment Management in Sydney, which manages $44.3 billion Australian dollars (US$45.1 billion) worth of assets as of the end of June.
The Fed announced that it will purchase $40 billion worth of mortgage-backed securities a month, while at the same time extending Operation Twist, a stimulus effort to keeps down interest rates by selling short-term bonds and using the proceeds to buy long-term bond bonds.
The central bank's policy setting committee also said that it could do more to help the economy if the labor market fails to improve.
The dollar was at Y77.57 early Friday, after falling to a seven-month low of Y77.13 against the yen Thursday.
There are signs that the Bank of Japan is worried about the yen's renewed strength, as traders say that the central bank carried out a rate check with several banks during New York trading hours, the first since early June. After checking the yen exchange rate with several banks, the central bank could immediately follow with actual intervention, making it one of the strongest signals the central bank can send.
The euro stabilized at $1.2996 during early Asian trading Friday, after rising 0.7% against the greenback Thursday. The Australian dollar was at $1.0554, compared to $1.0470 late Thursday in Sydney, while the dollar dropped to 1,123 won, from 1,128 won late Thursday in Seoul.
Japan's Nikkei added 1.6% despite the strong yen, as growth-sensitive sectors - such as steelmakers, shippers and trading companies - outperformed. Steel company JFE Holdings rose 4.3%, trading company Mitsui & Co climbed 2.6%, and shipping company Nippon Yusen was 3.6% higher.
South Korea's Kospi leaped 2.4%, with financial companies leading gains: KB Financial Group added 3.0% and Woori Finance Holdings was 3.6% higher.
Australia's S&P ASX 200 added 1.1%, as mining stocks reacted best to the U.S. stimulus measures: Rio Tinto advanced 2.7% and BHP Billiton rose 1.7%.
In corporate news, Fortescue Metals Group called a trading halt after slumping 14% on Thursday, as the miner is in talks with lenders over debt restructuring. The company has experienced volatile trading in recent sessions, following the violent moves in the price of iron ore, its core asset; the shares have fallen 33.3% over the last month.
-Write to Daniel Inman at Daniel.Inman@wsj.com
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(END) Dow Jones Newswires
September 13, 2012 21:23 ET (01:23 GMT)