Most Asian Shares Surge on Fed Remarks, China Stocks Plunge

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Most Asian Shares Surge on Fed Remarks, China Stocks Plunge

Japanese and Australian shares advanced on Thursday, with the Nikkei Stock Average hitting a four-month high at the close of trading, as investors welcomed US Federal Reserve’s commitment to keep interest rates low.

The Nikkei withstood the rise of the yen and added 1.6% to 15361.16, the highest point at close since January 29. According to Reuters, MCSI’s broadest measure of stocks outside Japan climbed 0.8%.

“The Fed didn’t say much that the market hadn’t already perceived. More interesting is the fact of Japan shares’ divergence from the dollar-yen market gyrations,” Nicholas Smith of CLSA to the Wall Street Journal.

Sharp Corp shares rose 3.5% in Tokyo after the firm said it had manufactured an LCD panel that could be cast into any shape, making it applicable in a wide array of scenarios. Nippon Sheet Glass soared 16.9% after Nomura Securities adjusted upwards the company’s stock rating to “buy” from “neutral.”

Asian stocks also received a boost from Chinese Premier Li Keqiang’s remarks that the country’s economy would not have a hard landing and attained the government’s growth rate of 7.5% this year.  The pronouncements boosted commodity-related shares, particularly in Australia, where miners pushed the blue-chip S&P/ASX200 up 1.6% to 5468.20.

Spot iron-ore added 1% to $90.30, propelling BHP Billiton to a 3.3% gain and Fortescue Metals Group to a 5% rise.

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Yet, China shares dropped drastically. Li’s pronouncements killed optimism among investors that Chinese would extend monetary support to the economy in the short-term.

“There are some concerns about insufficient liquidity following the new IPOs, but this likely a temporary fall,” analyst Amy Lin of Capital Securities said.

The Shanghai Composite index plunged 1.6% to 2023.73 while ChiNext of Shenzhen dropped 3.2% to 1320.66.

South Korea’s Kospi climbed 0.1% at 1992.03. Hang Sang Index of Hong Kong was little changed at 23167.73. Straits Times Index went down 0.2% in late trade.

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To contact the reporter of this story; Jonathan Millet at john@forexminute.com