3.5 C
New York
Sunday, November 28, 2021

Asian shares edge higher after U.S. Fed keeps stimulus

TOKYO (Reuters) – Asian shares inched higher and the dollar was underpinned on Thursday after the U.S. Federal Reserve maintained its commitment to a very accommodative monetary stance, and market nerves over the Cyprus bailout wrangling calmed.

The Fed ended a two-day meeting on Wednesday with a pledge to keep its aggressive policy stimulus despite improvements in the U.S. economy, pointing to still-high unemployment, fiscal headwinds out of Washington and risks from abroad.

Fed Chairman Ben Bernanke said the central bank might slow the pace of its bond buying but only after the labour market showed sustained improvement over a number of months.

“There will be reasonable U.S. economic growth this year and the unemployment rate will drift lower. But neither will be sufficient to induce the Fed to take its foot off the gas. The open-ended QE program is set to run into early 2014 at the very least,” said Martin McMahon, economist at Commonwealth Bank.

The MSCI’s broadest index of Asia-Pacific shares outside Japan, was up 0.2 percent while Australian shares added 0.5 percent. South Korean shares opened up 0.5 percent.

U.S. stocks rose, and European shares broke a three-day losing streak on Wednesday as investors bet on policymakers finding a fix for a Cyprus bailout.

Cyprus considered nationalising pension funds and ordered banks to stay shut till next week to avert financial chaos after it rejected the terms of a European Union bailout and turned to Russia for aid. Crisis talks among the political leadership in Nicosia are set to resume on Thursday.

Markets were also looking to comments by the European Central Bank, which has said it will provide liquidity to Cypriot banks within certain limits.

“Market participants are probably right to expect a resolution of the immediate crisis that does not destabilize broader European and global financial markets,” Barclays Capital said of bailout prospects for Cyprus.

“But the shape of such a compromise is not easy to imagine, and until one emerges, investors had better keep an eye or two on the eastern Mediterranean,” it said.

Barclays (LSE: BARC.L – news) noted there were still risks the euro zone may opt to keep Cyprus on financial lifeline indefinitely, without taking steps to ensure long-run sustainability, or force the island state out of the euro zone.

The dollar was up 0.1 percent against a basket of major currencies, and the euro stabilised around $1.2937 (85 pence), off a four-month low of $1.28435 hit on Tuesday. The dollar was around 95.92 against the yen.

Japan’s Nikkei stock average opened 1 percent higher. Japanese financial markets were closed on Wednesday for a holiday.

Market reaction was limited to data showing Japanese exports fell 2.9 percent in February from a year earlier, down for the first time in two months, suggesting a pick-up in global demand and a weaker yen have yet to fully benefit the country’s exports.

Traders eyed China’s manufacturing sector data due later in the day for clues on the fragile state of recovery in the world’s second-largest economy. In February, the survey by HSBC (LSE: HSBA.L -news) showed factory activity in Asia’s biggest economy grew at its slowest pace in four months.

U.S. crude futures fell 0.3 percent to $93.27 a barrel.

(Additional reporting by Ian Chua in Sydney; Editing by Eric Meijer)

Source: Reuters

Related Articles


Please enter your comment!
Please enter your name here

Stay Connected

- Advertisement -

Latest Articles

Popular Articles