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Thursday, Aug 23, 2012 5:30 AM UTC

Asia stocks rise on hopes of US, China stimulus

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Topics: From the Wires,

MUMBAI, India (AP) — Asian stock markets rose Thursday on hopes that more help for the global economy is on the way, after minutes from the U.S. Federal Reserve showed policy makers favor further stimulus and poor manufacturing data out of China fueled speculation that Beijing will also take action to boost its economy.

Stocks got a boost from the release of minutes from the last major meeting of the Fed, which showed members of its Open Market Committee favoring additional action to help the still-weak U.S. economy, unless substantial strengthening occurs.

Elsewhere, the HSBC Flash China manufacturing purchasing managers index, out Thursday, fell to a nine-month low of 47.8 in July, as weak global demand hit Chinese export orders.

“To achieve the stated policy goal of stabilizing growth and the jobs market, Beijing must step up policy easing to life infrastructure investment in the coming months,” said HSBC chief economist Hongbin Qu.

Markets took the news with equanimity.

Hong Kong’s Hang Seng index rose 0.9 percent to 20,068.7 and South Korea’s Kospi added 0.1 percent to 1,937.7. Australia’s S&P/ASX 200 added 0.2 percent to 4386.50. Japan’s Nikkei 225 index was up 0.3 percent, at 9,160.68. India’s benchmark Sensex index rose 0.4 percent, to 17,917.9. Benchmarks in Singapore, Indonesia and Thailand also rose.

Mainland China’s Shanghai Composite Index slipped 0.2 percent, to 2,103.32.

“People are hoping, hoping and hoping,” said Andrew Holland, chief of investment advisory at Ambit Capital in Mumbai. “Any kind of bad news from China just means they’re going to do some kind of easing.”

But he said those hopes are fragile, as China, the EU and the U.S. are all limited in what they can do to further boost their economies.

Housing prices in many Chinese cities have started to rise again, complicating stimulus efforts, he said.

“Come September if nothing has moved, I think we’re going to get a lot more volatility,” he said. “We’ve talked about easing, whether it’s China, Europe, India reforms, or the Fed. You buy on the rumor, sell on the news.”

The timing of a Chinese stimulus is also not clear. Andrew Sullivan, principal sales trader at Piper Jaffray in Hong Kong, said in a Thursday note that policymakers are likely to wait until after the 18th Party Congress, scheduled for October, to take major action.

“Then the new leadership can be credited for creating a turnaround, thus cementing the people’s support,” he said. That would also give Chinese policymakers time to see what Europe and the U.S. do first, potentially leveraging their actions, he said.

On Wall Street, stocks climbed back from lows as investors took comfort from the Fed’s signals.

The Dow Jones industrial average fell 0.2 percent to close at 13,172.76. The Standard & Poor’s 500 index rose marginally to 1,413.49. The Nasdaq composite index rose 0.2 percent, to 3,073.67.

Benchmark oil for October delivery rose 77 cents to $98.03 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 42 cents to finish Wednesday at $97.26 per barrel.

In currencies, the euro rose to $1.2538 from $1.2530 late Wednesday in New York. The dollar rose to 78.57 yen from 78.44 yen.

More Erika Kinetz.

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