HONG KONG (AFP) – Asian markets mostly rose Wednesday, with Hong Kong and Shanghai boosted by a report that China’s central bank had pumped $81 billion into the country’s five biggest lenders, while traders also awaited a US Federal Reserve policy decision.
A rally on Wall Street increased buying incentives, with US shares helped by the China report as well as a feeling that the Fed would fail to announce a significant policy shift.
Shanghai ended 0.49 per cent, or 11.34 points, higher at 2,307.89, Hong Kong jumped 1.00 per cent, or 240.40 points, to 24,376.41 and Seoul rose 0.96, or 19.69 points, to close at 2,062.61.
However, Tokyo gave up early gains to finish 0.14 per cent lower, dipping 22.86 points to 15,888.67, while Sydney closed down 0.70 per cent, or 38.1 points, at 5,407.3.
A report on web portal Sina said the People’s Bank of China would inject 500 billion yuan ($81 billion) into the five top state-owned banks, with a view to boosting lending to businesses.
The move would be a major stimulus injection following a string of weak data – including on trade and industrial output – that has raised questions about the state of the world’s number two economy.
The injection, a three-month low-interest rate loan, is similar to a 0.5 percentage point cut to the ratio of cash China’s entire banking system must keep in reserve, according to Dow Jones Newswires.
“Given policymakers have shown a willingness to loosen in the face of weaker data, we believe growth will rebound in the coming months,” said a report by Goldman Sachs.
The news boosted US shares Tuesday, with the Dow up 0.59 per cent, the S&P 500 gaining 0.75 per cent and the Nasdaq also adding 0.75 per cent.
The pick-up in New York was helped by receding expectations the Fed would adopt a more hawkish tone at the meeting ending Wednesday.
Investors globally have been pulling their cash off the table recently on speculation the bank will bring forward its timetable for raising interest rates as the economy picks up speed.
The Fed has previously said it would keep rates low for a “considerable time” after ending its massive stimulus programme.
An increase could hit Asian equities and currencies by making them vulnerable to a sell-off, as the incentive for investors to seek higher yields in regional markets is reduced.
However, there are still concerns about the US economy among many investors, with some suggesting the bank will stick to its cautious approach.
In foreign exchange trade the dollar was at 107.23 yen in Asia, compared with 107.15 yen in New York Tuesday afternoon. The euro bought $1.2961 and 138.98 yen against $1.2957 and 138.85 yen.
The pound rose against the dollar a day before Scotland’s knife-edge independence vote, which could lead to the break-up of the United Kingdom and hammer its economy.
It rose to $1.6324 from $1.6268, helped by polls tipping the balance slightly in favour of a “No” vote, while the Fed speculation also provided support.
On oil markets, US benchmark West Texas Intermediate (WTI) for October delivery fell 38 cents to $94.50 while Brent crude for November also eased 38 cents to $98.67 in afternoon trade.
WTI jumped $1.96 on Tuesday while Brent gained $1.17.
Gold was at $1,235.71 an ounce, against $1,241.18 an ounce late Monday.