Asia appreciates US Fed’s decision

HONG KONG - Agence France-Presse

Asian markets were mostly higher yesterday after the US Federal Reserve said it would keep its loose monetary policy in place until there is stronger evidence America’s economy is
back on its feet.

The euro rose despite another round of downbeat data from debt-hit Europe, including economic pillar Germany.

Tokyo gained 1.13 percent, or 110.90 points, to 9,055.20 thanks to a weak yen which makes exports more competitive and hopes for fresh monetary easing by Japan’s central bank. Seoul rose 0.55 percent, or 10.54 points, to 1,924.50 and Sydney closed 0.10 percent, or 4.7 points, higher at 4,510.5.

Hong Kong rose for a tenth straight session. It added 0.21 percent, or 46.45 points, to 21,810.23 thanks to huge inflows of cash which have pushed the local dollar to the high end of its trading band against the greenback.

But Shanghai eased 0.68 percent, or 14.41 points, to 2,101.58.

The Fed said on Oct. 24 it would stick to its $40 billion a month bond-buying program -known as quantitative easing- for as long as needed and keep interest rates at record lows until at least 2015.

Despite recent figures pointing to an improvement in the economy, including in household spending and in the housing market, the Federal Open Market Committee said growth remained at a “moderate” pace.

It pointed to a slowdown in business investment and a high unemployment rate, adding there was stil
lvulnerability to strains in the global economy.

“The decision to reaffirm their quantitative easing stance and maintain the guidance on short-term rates reflects a sober view of the domestic recovery,” said Steven Ricchiuto, chief economist at Mizuho Securities USA, in a note to clients.

“Global financial market risk and a depressed labour market were explicitly used to justify policy,” he added, according to Dow Jones Newswires. Wall Street ended in the red as corporate earnings continued to weigh. The Dow fell 0.19 percent, the S&P 500 shed 0.31 percent and the Nasdaq lost 0.29 percent.

In Europe, data showed German business confidence fell in October for the sixth month in a row to the lowest level since February 2010.