Asian stocks higher as G7 pledges to restrain yen
Asian markets posted solid gains Friday, and the yen retreated from historic highs, after the world’s seven major industrial nations agreed to intervene in currency markets to help earthquake-stricken Japan.
The benchmark Nikkei 225 in Tokyo rose 2.3 percent, or 205.47 points, to 9,168.97, capping a turbulent week that saw stocks lose 16 percent on Monday and Tuesday. Those were the first two trading days after Japan was struck by a mammoth earthquake and towering tsunami on March 11 that wiped out much of its industrial northeast.
Other major Asian indexes also opened higher after mostly dour trading the day before. Hong Kong’s Hang Seng rose 0.6 percent to 22,408.81 and South Korea’s Kospi was up 1.2 percent to 1,983.28.
Benchmarks in Singapore, Taiwan, New Zealand and Indonesia were also up, while Australia’s S&P/ASX 200 dropped 0.1 percent to 4,555.30.
World attention, diverted to Japan after the 9.0-magnitude temblor, was turning back to the volatile Middle East, as the United Nations authorized military action and a no-fly zone over Libya to prevent its leader, Moammar Gadhafi, from crushing a rebel movement. That, plus the intervention to help Japan’s yen, encouraged investors to buy up shares, analysts said.
“Equities are likely to stage a relief rally on global cooperation to ‘stabilize’ Libya and Japan,” analysts at DBS Bank in Singapore said in a report.
Still, oil prices rose above $103 a barrel on fears of a prolonged conflict in the OPEC member country. Oil had fallen earlier this week to below $97 on concerns that the earthquake in Japan would crimp crude demand as its economy struggles to recover.
Finance officials from the G-7 said they had agreed on coordinated currency intervention to support Japan’s economy following the earthquake. It would mark the first time the G-7 countries have jointly intervened in currency markets since the fall of 2000.
The Japanese government said it would intervene in the Tokyo market once morning trading opened, but the Finance Ministry declined later to confirm whether that happened. Finance Minister Yoshihiko Noda said the planned intervention was meant to calm “volatility” and the G-7 governments were not aiming at a specific exchange rate for the yen.
A stronger yen hurts Japan’s powerhouse export sector — potentially dealing another problem to an economy already wracked by the biggest earthquake in its history and also grappling with crippled nuclear reactors that are still leaking radiation.
The G-7 pledge adds to a flurry of moves by Japan to calm roiled financial markets. The Bank of Japan injected an additional 6 trillion yen ($76.7 billion) in same-day funds Thursday that banks could access immediately. From Monday to Wednesday, the central bank’s emergency funding totaled 55.6 trillion yen ($688.3 billion).
In Asia on Friday, the dollar rose to 81.82 yen after the intervention announcement. It had traded at 78.97 yen Thursday afternoon after earlier hitting 76.53 yen — an all time low for the dollar and a record high for the yen. The euro stood at $1.4074, up from $1.4030 late Thursday.
The yen’s strength in the wake of the disaster has been attributed to investors expecting the Japanese to repatriate funds from overseas to pay reconstruction costs — or in the case of insurance companies, to pay claims for the massive loss of property and life. But analysts also said they believed currency speculators had contributed to the yen’s rise.
In New York on Thursday, stocks rose broadly on signs that the U.S. economy is improving.
A gauge of manufacturing in the mid-Atlantic region jumped in February to the highest point since January 1984. The survey from the Federal Reserve’s Philadelphia branch showed new orders soared. Production at U.S. factories, mines and utilities dipped last month but was higher in previous months than first estimated, according to the Federal Reserve.
The Labor Department reported that the number of people applying for unemployment benefits fell more than economists expected last week. Ongoing claims dropped to the lowest level since October 2008.
The Standard & Poor’s 500 rose 16.84, or 1.3 percent, to 1,273.72. The Dow gained 161.29 points, or 1.4 percent, to 11,774.59. The Nasdaq rose 19.23, or 0.7 percent, to 2,636.05. The technology-heavy index is down 0.6 percent for the year.
Benchmark crude for April delivery was up $1.82 at $103.24 a barrel in electronic trading on the New York Mercantile Exchange. The contract added $3.44 to settle at $101.42 on Thursday.
Source: AP