Asian stocks follow Wall Street higher on bank news

BEIJING (AP) — Asian stock markets followed Wall Street higher yesterday after United States (US) regulators removed some limits on banks’ ability to make investments.

Benchmarks in Tokyo, Sydney and Southeast Asia advanced while Hong Kong declined. Chinese markets were closed for a holiday.

Wall Street closed higher after the Federal Reserve and other regulators announced they will ease rules that limit banks’ ability to invest in hedge funds and some other areas. The change could help to shore up slim bank profits after central banks cut interest rates to almost zero in response to the coronavirus pandemic.

Gains were relatively small because Washington delivered no more than was expected, said Stephen Innes of AxiTrader Corp in a report. He said markets gave a similar “mild reaction” to the Bank of England’s earlier decision to ease policy.

“Investors are finding it hard to see the marginal or incremental new support,” said Innes. “Investors may need more prominent catalysts. Ideally a vaccine.”

A currency trader watches monitors at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul. PHOTO: AP

The Nikkei 225 in Tokyo rose one per cent to 22,474.65 while Seoul’s Kospi gained 1.1 per cent to 2,134.65. Hong Kong’s Hang Seng lost 0.8 per cent to 24,579.56.

The S&P-ASX 200 in Sydney added 1.5 to 5,904.10 and India’s Sensex opened up 0.9 per cent at 35,150.31 per cent New Zealand, Singapore and Jakarta also advanced.

Analysts say investors are looking ahead to a possible rebound from the deepest global downturn since the 1930s and trying to buy companies that will thrive after the pandemic ends. But they warn the market rise might be too fast and too early to be sustained by an uncertain economic outlook.

Asian economies are wrapping up their worst quarter since the 2008 financial crisis.

The US economy shrank by five per cent in the first quarter of the year, the Commerce Department reported on Thursday. Forecasters expect a worse decline during the quarter that ends next week.