Asian stocks surge ahead of U.S. bank asset plan
Asian stock markets soared Monday ahead of a U.S. announcement to purge as much as $1 trillion US in toxic bank assets and as Japan signaled more stimulus measures to resuscitate the world's second-largest economy.
Tokyo shares helped lead the region's gains, with the country's benchmark hitting a six-week high, after Japan's finance minister said aggressive public spending to the tune of $208 billion might be needed to end the country's painful recession.
Investors also cheered U.S. President Barack Obama's newest effort to heal the hard-hit financial sector and restore bank and consumer lending. The program, to be unveiled Monday, involves creating a new government entity, the Public-Private Investment Program, to clear from bank balance sheets up to $1 trillion in souring securities and loans at the root of the current crisis.
The initiative, which seeks to enlist private investors by offering billions of dollars in low-interest loans and sharing certain risks, was just the latest in an unprecedented effort by major governments to stem the worst global downturn in decades.
The mood was shadowed by questions about whether the government had enough resources to fund the plan and how the assets would be priced. But for now, news of the bailout re-energized a global rally that started two weeks ago on signs of improvement in the financial system.
"It's becoming difficult to remain bearish," said Desmond Tjiang, chief investment officer, who helps manage $3 billion in Asian equities at Fortis Investment Management in Hong Kong. "The governments have definitely helped ... and people are still hoping for a second-half recovery."
In Japan, the Nikkei 225 stock average advanced 269.57 points, or 3.4 per cent, to 8,215.53 as a weaker yen further boosted sentiment. Hong Kong's Hang Seng jumped 613.91, or 4.8 per cent, 13,447.42, and South Korea's Kospi climbed 2.4 per cent to 1,199.50.
Shanghai's key index added two per cent. Australia's benchmark was up 2.4 per cent, while India's Sensex climbed 3.8 per cent to 9,309.12.
U.S. futures were boosted by Monday's pending announcement about the government's bank plan. Dow futures were up 43 points, or 0.6 per cent, to 7,454, while S&P 500 futures were up 22.5 points, or 2.9 per cent, to 786.6.
In Asian stocks, banks were especially strong, with Japanese mega bank Mitsubishi UFJ Financial Group jumping 4.7 per cent and China Construction Bank surging 5.3 per cent in Hong Kong.
Commodities firms such as Australian mining giant BHP Billiton Ltd, up 3.5 per cent, advanced on the back of higher prices for oil and metals. Benchmark crude for May delivery gained 72 cents at $52.79 a barrel in Asian trade.
Friday in New York, the Dow Jones industrial average fell 122.42, or 1.7 per cent, to 7,278.38.
Broader stock indicators also lost ground, with the Standard & Poor's 500 off 15.50, or two per cent, to 768.54.
In currencies, the dollar trimmed its gains to trade at 96.12 yen from 95.95 yen late Friday. The euro was higher at $1.3703 from $1.3582.