Asia shares rise as ECB says rates rise ’very distant’
Danny McCord in Hong Kong
Asian markets climbed on Friday after the European Central Bank said it would keep interest rates at record lows for “as long as necessary”, while concerns over Portugal’s political crisis also abated.
The euro remained under pressure in Asia after suffering losses late Thursday in the wake of the ECB announcement, while the dollar extended its gains against the yen after climbing back above 100 yen.
Tokyo rose 1.19 per cent, Hong Kong added 1.33 per cent, Sydney was 0.94 per cent higher and Shanghai was up 0.13 per cent.
Seoul climbed 0.23 per cent despite a dive in market giant Samsung Electronics, which announced a weaker-than-expected earnings forecast.
With New York markets closed for Independence Day, traders took their lead from Europe, where markets rallied on comments from the ECB that it would maintain its easy monetary policy.
The bank’s policy-setting governing council “expects the key ECB interest rates to remain at present or lower levels for an extended period of time”, its head, Mario Draghi, said.
“Our exit (from low interest rates) is very distant.”
Speaking to a news conference after the ECB’s governing council voted to hold its key interest rate at an all-time low of 0.50 per cent for the third month in a row, Draghi vowed that “monetary policy will remain accommodative for as long as necessary”.
At the same time the Bank of England said it would keep interest rates low and hinted it would not lift them in the short term.
London’s FTSE 100 rose 3.08 per cent, the DAX 30 in Frankfurt added 2.11 per cent and the Paris CAC 40 gained 2.90 per cent. Madrid was up more than 3.0 per cent.
On forex markets the euro tumbled in London trade, with low interest rates meaning the currency would not provide very good returns.
And on Friday it continued to fall, buying US$1.2896 and 129.43 yen, off from US$1.2922 and 129.62 yen in London.
Worries about Portugal’s future were also soothed after the centre-right coalition said it had found a “formula” to avert a break up of the government, after the shock resignation of the foreign and finance ministers.
The pair had stepped down in a dispute over austerity policies put in place as part of a deal to qualify for bailout cash.
The dollar, which has been buoyed by an improved global outlook, rose to 100.40 yen in Tokyo, compared with 99.71 yen in London late Thursday.
Eyes will later Friday turn to Washington, awaiting the release of non-farm payroll data, which will provide an idea of the state of the US economy.
In Seoul, electronics giant Samsung fell 2.81 per cent after estimating 9.5 trillion won (US$8.3 billion) in operating profit for the April-June quarter.
While it said the figure would be a record, analysts had expected a figure of more than 10 trillion won after it released its much-vaunted Galaxy S4 smartphone in April.
“Demand for high-priced, high-end smartphones shows slowing growth, which could hurt Samsung’s profit margin,” IBK Investment and Securities analyst Lee Seung-Woo told the Yonhap news agency.
Oil prices were mixed as dealers keep tabs on events in Egypt after the army overthrew President Mohamed Morsi, with fears growing that the coup could send shockwaves through the crude-rich Middle East.
In morning trade New York’s main contract, light sweet crude for delivery in August, was down eight cents at US$101.16 a barrel, while Brent North Sea crude for August gained five cents to US$105.59.
Gold was at US$1,243.85 per ounce at 0230 GMT, compared with US$1,250.80 late Thursday.