HONG KONG (AFP) – Asian markets rallied for a third straight day Thursday following another record close on Wall St, as investors cheered an upbeat report on the economy from the US central bank.
The dollar sat just short of the 120 yen mark, a level it has not seen for more than seven years, while the euro struggled ahead of a European Central Bank meeting later in the day.
Tokyo rose 0.94 per cent, or 166.78 points, to 17,887.21 and Seoul added 0.85 per cent, or 16.70 points, to close at 1,986.61, while Sydney put on 0.88 per cent, or 46.98 points, to 5,368.8.
Hong Kong jumped 1.72 per cent, or 403.94 points, to 23,832.56, while Shanghai surged 4.31 per cent, or 119.93 points, to 2,899.46.
Traders in mainland China were looking to join in a recent rally that has seen the composite index rise about 20 per cent in the past three weeks, helped by the People’s Bank of China’s surprise interest rate cut.
“Investors are flooding into blue chip stocks with low valuations… the balloon in the stock market is being blown up and it has yet to burst,” Deng Wenyuan, an analyst at Soochow Securities, told Dow Jones Newswires.
Regional markets have climbed this week following a slew of strong US data and record finishes on Wall Street as the world’s biggest economy gets back on track.
On Thursday, dealers in Asia cheered a report from the Federal Reserve that said “a number” of the central bank’s 12 districts said contacts “remained optimistic about the outlook for future economic activity”.
The Beige Book, a collection of anecdotal information on current economic conditions, is closely watched by investors as a barometer of the health of the economy.
For the first time in more than a year, the Fed dropped its “modest” and “moderate” descriptions of overall growth, saying reports suggest “that national economic activity continued to expand” in the past two months.
The news – which came a day after healthy construction and sales figures – was greeted with glee on Wall Street. The Dow rose 0.18 per cent to its second straight record close, while the S&P 500 gained 0.38 per cent, also a new all-time high, and the Nasdaq added 0.39 per cent.
In foreign exchange trade, the dollar, buoyed by the string of positive news, pushed towards 120 yen, which it last saw in July 2007.
In afternoon trade the greenback bought 119.90 yen compared with 119.80 yen in New York, and analysts expect it to breach the key marker soon.
The euro was at $1.2300 and 147.62 yen. In US trade, it hit a two-year low of $1.2308 against the dollar and bought 147.48 yen.
Europe’s single currency has suffered selling pressure ahead of the ECB meeting, which investors are watching to see if policymakers introduce monetary easing measures to kickstart the region’s sluggish economy.
While the euro has been sold ahead of the meeting, expectations are that the central bank will hold fire but signal a move in the new year.
“Even if it does not step up its actions just yet, it will choose language for the statement that makes additional easing a near certainty for the first quarter of 2015,” said Berenberg Bank economist Christian Schulz.
Gold was at $1,203.88 an ounce, compared with $1,200.38 late Wednesday. Taipei advanced 0.54 per cent, or 49.85 points, to 9,225.11.