Renewed confidence lifts Asia stocks ahead of Fed decision

AFP: HONG KONG: Asian markets surged on Wednesday (16 December), while the dollar held its strength after overnight gains as buying confidence returned to trading floors ahead of an expected US interest rate rise.

After more than a week of sharp losses, equities enjoyed some healthy buying after a rally in New York and Europe fuelled by upbeat economic data and a rare rally in oil prices.

However, the crude gains were short-lived and prices resumed their downtrend in Asian trade Wednesday, with buying dampened by data indicating US stockpiles rose last week.

The commodity has taken a hammering since 4 December - falling about 12% - when the OPEC exporters' group refused to set output limits, adding to worries about a supply glut.

The Federal Reserve is expected later Wednesday to raise borrowing costs at its policy meeting, ending months of speculation and uncertainty on global markets.

And while the move could be considered a reason to sell shares, analysts said the rise had largely been priced into assets.

The case for an increase has grown stronger over the past year as the US economy continued to show it was enjoying a healthy recovery. The argument was reinforced Tuesday by data showing year-on-year consumer inflation hit 2 % in November, matching the Fed's target rate.

The news lifted the dollar to ¥121.66 in New York from around ¥120.80 earlier Tuesday in Asia, while the euro dipped to US$1.0930 from above US$1.10.

In Tokyo on Wednesday the dollar edged up against the Japanese unit but eased slightly against the single currency, which won some support from a better-than-expected reading on investor confidence in Germany, Europe's biggest economy.

Regional stock markets were all higher, with Tokyo climbing 2.61% by the close, Sydney up 2.4% and Seoul 1.88% higher. Shanghai gained 0.17%.

Hong Kong closed up two% to end a nine-session losing streak - its longest run of selling since 1984 - that saw it stumble more than five%.

There were also gains in other markets, with Manila, Jakarta and Taipei each climbing more than one%.

The gains in Asia tracked strong advances in Europe Tuesday, where Paris and Frankfurt added more than three% while in New York the Dow, Nasdaq and S&P 500 climbed around one%.

In early European trade Wednesday London climbed 0.30%, Frankfurt gained 0.25% and Paris was up 0.15%.