Business

ECB rate cut cheers stocks, euro subdued

May 03, 2013
Latest Update: May 03, 2013 07:25 pm

SYDNEY, May 3 — Share markets across Asia mostly rose today after an interest rate cut from the European Central Bank and prospects for more easing lifted hopes that fresh stimulus from yet another major central bank will help foster a stronger global recovery.

Trading, however, was subdued with Japanese financial markets closed for holidays and ahead of the closely-watched US non-farm payrolls report due later in the day.

ECB President Mario Draghi said the ECB stood ready to ease further if needed, dealing a blow to the euro currency as investors looked elsewhere for better returns.

The euro, which skidded nearly 1 per cent yesterday, last traded at US$1.3076, little changed on the day. Against the yen, it hovered just above 128.00, having retreated from a 3-year peak around 131.10 set last month.

The ECB’s decision came a day after the Federal Reserve recommitted to its aggressive stimulus programme and a month after the Bank of Japan stunned markets by promising to inject about US$1.4 trillion (RM4.2 trillion) into the economy to spur growth.

“The ECB’s action comes as a sign governments are determined to tackle the economic issues. This points to further stimulus measures and it is positive for sentiment,” said Lee Jae-hun, a market analyst at Mirae Asset Securities.

India’s central bank is also widely expected to cut interest rates later in the day to help lift the economy from its slowest growth in a decade.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.4 per cent, with Hong Kong’s Hang Seng index 0.7 per cent higher and Chinese stocks up more about 2 per cent.

Australia’s main share index advanced 0.2 per cent after Westpac became the latest major bank to handily beat expectations with a 10 per cent jump in profit .

Westpac shares jumped more than 2 per cent at one stage, lifting its market value to A$107 billion, which is more than Barclays and Deutsche Bank combined. The share price has since reversed gains.

Singapore’s Straits Times index bucked the generally positive trend, slipping 0.7 per cent.

After a broad-based rebound yesterday, commodity prices were mixed with US crude drifting 0.2 per cent lower at US$93.82 per barrel. This followed a near 3-per cent rally yesterday.

Copper, however, extended gains and was nearing the US$7,000-a-tonne price critical to market bulls. It rose 2.2 per cent to 6,996.25, continuing to recoup a chunk of what it lost earlier in the week.

Markets appear to have shrugged off data showing China’s services sector slowed in April, reinforcing views the recovery in the world’s second biggest economy remains modest. — Reuters

Biz Updates from PR Newswire

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