Business Standard

Asia stocks take off as US fiscal cliff crisis ends

Related News

Asian stocks rose nearly two per cent to hit a five-month high and the as both houses of passed a bill to end the “fiscal cliff” crisis that threatened a US recession and roiled world financial markets.

were set to rally on the news, with spreadbetters expecting London's to rise about one per cent and Frankfurt's to open up 0.5 per cent.

The Congress approved extending to all but the nation's wealthiest households in a budget deal that stopped automatic implementation of $600 billion in spending cuts and tax increases. The bill’s passage in Congress allayed earlier concerns over complaints from a number of Republicans that spending cuts were still not adequately addressed. The temporary reprieve that the deal offers the US economy also sets up Wall Street for a strong start to trading which resumes later in the day.

Asian stock markets cheered the developments as a major risk for investors, namely a slump in the global economy, appeared to have receded for now. “This is great news for global growth and explains why shares and other growth-related assets such as the Australian dollar are up strongly today,” said Shane Oliver, strategist at AMP Capital.

Australian shares rose to a 19-month high while the Aussie dollar jumped to 1.4082. The ex-Japan index of stocks rose 1.9 per cent. Chinese shares in jumped three per cent as last month’s rally spilled over into the new year with stocks closely linked to China’s economy such as steel and cement posting the biggest gains.

In South Korea, where data showed manufacturing activity rose for the first time in seven months in December, the was up 1.6 per cent led by a 3.6 per cent jump in smartphone giant Samsung Electronics. “The index is riding high on the US fiscal deal. This upward momentum will last a couple of weeks, after which there will be a reality check due to the unresolved issue of the spending cuts and debt ceiling,” said Cho Tae-hoon, an analyst at Samsung Securities.

Singapore was the best-performing market in South East Asia rising 1.2 per cent after data showed the city-state dodged an expected economic recession in the last three months of 2012.

Risk on Asian stocks outside Japan rose nearly 20 per cent last year as a combination of improving economic data from China, easing worries about a euro zone blow-up, and global central bank easing that encouraged investors back into equity markets.

Sakthi Siva, Asia strategist for Credit Suisse, said in a note to clients that 2013 could see similar returns for Asian equities, given a solution to the fiscal crisis. "As we move into 2013 we retain our bullish bias, and our theme is whether markets could catch up with earnings," said Siva, adding that markets in China and India could offer the most upside given the mismatch between index levels and earnings expectations. Risky assets across the board got a lift with crude oil futures up 1.1 percent and copper futures in London jumping 1.7 percent. The euro rose to $1.3261 against the U.S. dollar. The safe-haven U.S. dollar edged lower, falling 0.4 percent against a basket of major currencies. The Japanese yen continued its slide as investors wagered the Bank of Japan would have to take ever-more aggressive easing steps to support the economy and satisfy the new government. The yen fell to 87.17 against the dollar to its weakest level since July 2010. The Japanese currency also dropped to depths not seen in more than four years against the Australian and New Zealand dollars.

Read more on:   
|
|
|
|
|
|
|
|
|
|
|
|
|

Asia stocks take off as US fiscal cliff crisis ends

Asian stocks rose nearly two per cent to hit a five-month high and the dollar fell as both houses of Congress passed a bill to end the “fiscal cliff” crisis that threatened a US recession and roiled world financial markets.

Asian stocks rose nearly two per cent to hit a five-month high and the as both houses of passed a bill to end the “fiscal cliff” crisis that threatened a US recession and roiled world financial markets.

were set to rally on the news, with spreadbetters expecting London's to rise about one per cent and Frankfurt's to open up 0.5 per cent.

The Congress approved extending to all but the nation's wealthiest households in a budget deal that stopped automatic implementation of $600 billion in spending cuts and tax increases. The bill’s passage in Congress allayed earlier concerns over complaints from a number of Republicans that spending cuts were still not adequately addressed. The temporary reprieve that the deal offers the US economy also sets up Wall Street for a strong start to trading which resumes later in the day.

Asian stock markets cheered the developments as a major risk for investors, namely a slump in the global economy, appeared to have receded for now. “This is great news for global growth and explains why shares and other growth-related assets such as the Australian dollar are up strongly today,” said Shane Oliver, strategist at AMP Capital.

Australian shares rose to a 19-month high while the Aussie dollar jumped to 1.4082. The ex-Japan index of stocks rose 1.9 per cent. Chinese shares in jumped three per cent as last month’s rally spilled over into the new year with stocks closely linked to China’s economy such as steel and cement posting the biggest gains.

In South Korea, where data showed manufacturing activity rose for the first time in seven months in December, the was up 1.6 per cent led by a 3.6 per cent jump in smartphone giant Samsung Electronics. “The index is riding high on the US fiscal deal. This upward momentum will last a couple of weeks, after which there will be a reality check due to the unresolved issue of the spending cuts and debt ceiling,” said Cho Tae-hoon, an analyst at Samsung Securities.

Singapore was the best-performing market in South East Asia rising 1.2 per cent after data showed the city-state dodged an expected economic recession in the last three months of 2012.

Risk on Asian stocks outside Japan rose nearly 20 per cent last year as a combination of improving economic data from China, easing worries about a euro zone blow-up, and global central bank easing that encouraged investors back into equity markets.

Sakthi Siva, Asia strategist for Credit Suisse, said in a note to clients that 2013 could see similar returns for Asian equities, given a solution to the fiscal crisis. "As we move into 2013 we retain our bullish bias, and our theme is whether markets could catch up with earnings," said Siva, adding that markets in China and India could offer the most upside given the mismatch between index levels and earnings expectations. Risky assets across the board got a lift with crude oil futures up 1.1 percent and copper futures in London jumping 1.7 percent. The euro rose to $1.3261 against the U.S. dollar. The safe-haven U.S. dollar edged lower, falling 0.4 percent against a basket of major currencies. The Japanese yen continued its slide as investors wagered the Bank of Japan would have to take ever-more aggressive easing steps to support the economy and satisfy the new government. The yen fell to 87.17 against the dollar to its weakest level since July 2010. The Japanese currency also dropped to depths not seen in more than four years against the Australian and New Zealand dollars.

image

Read More

Former CJI Kapadia joins BSE

Nominated to post by Sebi, takes over as public interest director

Recommended for you

Advertisements

Quick Links

Market News

Aluminium up by 0.7% on pick-up in demand

A firming trend in base metals at the London Metal Exchange (LME) also supported the rise in prices

Nickel rose by 1.4% on positive global cues

Speculators enlarged positions on positive cues from global markets

Igarashi Motors rallies on strong Q4 results

The stock rallied 9% to Rs 535 after reporting a 71% YoY jump in net profit at Rs 17.04 crore in the March 2015 quarter.

PNC Infratech declined below issue price

The stock had listed at Rs 387, a 2.4% premium against its issue price of Rs 378 per share; At 1004 hours, the stock was trading at Rs 377

Nifty hovers around 8,350; Tata Motors, ITC decline 1%

By 9:55, the Sensex was lower by 63 points at 27,581 and the Nifty has slipped by 17 points at 8,353

 

Back to Top