Asian stocks hit two-year high
Tuesday, 5 October 2010
HONG KONG, Oct 4 (Reuters): Asian stocks shot to a two-year high Monday, boosted by interest in emerging markets, while the dollar edged up after last week's selloff though speculation the Federal Reserve will add to money supply was still rife.
European stocks were between half a per cent and 1 per cent lower in early dealings, with the benchmark FTSE Eurofirst 300 down 0.75 per cent, extending a five-day retreat. The dollar remained close to an eight-month low against a basket of major currencies, with expectations increasing the Fed will resort to a second round of bond purchases before the year is over to support the US economy.
By contrast, Chinese manufacturing activity has held up surprisingly well, keeping investors confident about the region's prospects and pushing up the MSCI index of Asian stocks outside Japan to the highest level since June 2008.
"Continued foreign buying, amid the US dollar's recent weakness and an increasing preference for emerging market stocks, has lifted the market to a new high," said Lee Jin-woo, a market analyst at Mirae Asset Securities in Seoul.
Strong foreign portfolio flows into the region have lifted Asian currencies, putting pressure on regional central banks to step up intervention to limit the inflow of speculative "hot money" and to support their export-oriented economies.
Financial leaders gather for the International Monetary Fund meeting this week and the concept of countries keeping their currencies weak for export-gain is likely to be a hot topic.
Japan's Nikkei closed 0.3 per cent lower in choppy trade ahead of a Bank of Japan (BoJ) policy decision Tuesday. The dollar surged against the yen in a short-covering rally as the Japanese currency retreated against other currencies as investors unwound some long yen positions ahead of the BoJ meeting.
European stocks were between half a per cent and 1 per cent lower in early dealings, with the benchmark FTSE Eurofirst 300 down 0.75 per cent, extending a five-day retreat. The dollar remained close to an eight-month low against a basket of major currencies, with expectations increasing the Fed will resort to a second round of bond purchases before the year is over to support the US economy.
By contrast, Chinese manufacturing activity has held up surprisingly well, keeping investors confident about the region's prospects and pushing up the MSCI index of Asian stocks outside Japan to the highest level since June 2008.
"Continued foreign buying, amid the US dollar's recent weakness and an increasing preference for emerging market stocks, has lifted the market to a new high," said Lee Jin-woo, a market analyst at Mirae Asset Securities in Seoul.
Strong foreign portfolio flows into the region have lifted Asian currencies, putting pressure on regional central banks to step up intervention to limit the inflow of speculative "hot money" and to support their export-oriented economies.
Financial leaders gather for the International Monetary Fund meeting this week and the concept of countries keeping their currencies weak for export-gain is likely to be a hot topic.
Japan's Nikkei closed 0.3 per cent lower in choppy trade ahead of a Bank of Japan (BoJ) policy decision Tuesday. The dollar surged against the yen in a short-covering rally as the Japanese currency retreated against other currencies as investors unwound some long yen positions ahead of the BoJ meeting.