US easing hopes lift Asian markets

Agence France-Presse

Posted at Oct 11 2010 03:15 PM | Updated as of Oct 11 2010 11:15 PM

HONG KONG - Prospects of more drastic monetary easing in the United States boosted most Asian stocks on Monday after the world's biggest economy lost more jobs than expected in September.

The jobs news put more pressure on the enfeebled dollar, which was flirting with new lows against the yen after hitting a fresh 15-year trough in late New York trade Friday.

The US government on Friday said payrolls slipped by a larger-than-expected 95,000 in September, as a steep decline in government posts outweighed a rise in private-sector employment.

Dealers said they now expected the Federal Reserve to announce pump-priming plans such as "quantitative easing" -- in effect, printing money -- to kick-start the US economy, which boosted Asian share prices.

"It doesn't seem to matter what economic news comes out in the US because the market is fixated on quantitative easing," said RBS Morgans investment adviser Danny Dreyfus.

Sydney rose 0.35%, or 16.2 points, to end at 4,697.5 and Hong Kong was 1.23% higher at a 2-year high by the break.

Shanghai soared 2.52% in the afternoon and Singapore added 0.31%.

Markets in Tokyo were closed for a public holiday.

With the probability of more dollars being flooded into the economy, the greenback last week slipped to 81.73 against the yen, its lowest reading since April 1995, before ending at 82.06.

In early Asian trade Monday it fell to 82.03 yen.

"It's a case of carry on selling the US dollar," Phil Burke, head of currency trading at JPMorgan in Sydney, told Dow Jones Newswires.

He added that the market had now become comfortable with the idea of imminent quantitative easing by the Fed.

Recent comments by the Federal Open Market Committee (FOMC) suggest more easing could be in the pipeline.

"In our view, recent speeches from FOMC members... provide a clear signal that the Fed will launch a new asset purchase program in November," analysts from Barclays Capital said in a report.

But with the strong yen hurting Japanese exporters, dealers are keeping an eye on authorities in Tokyo to see if they will step into the currency markets for a second time after last month's intervention, the first in six years.

The euro traded at 1.3973 dollars, up from 1.3926 in late US trade Friday.

A weekend meeting of the International Monetary Fund failed to find a solution to what some see as a looming currency war, with Washington and Beijing at loggerheads over China's currency.

The United States and other nations argue that China is keeping the yuan artificially weak in order to give its exporters an advantage, a charge that Beijing denies.

A statement from the International Monetary and Financial Committee, the IMF's policy arm, stopped short of a specific call on countries to change policies of using a low currency and accumulation of reserves to boost exports.

When asked about the lack of a stronger statement, IMF managing director Dominique Strauss-Kahn said: "There is only one obstacle, and that is an agreement of the members."

On oil markets New York's main contract, light sweet crude for November delivery, gained 79 cents to $83.45 a barrel and Brent North Sea crude for November was 59 cents higher at $84.62.

Gold opened at $1,351.00-$1,352.00 an ounce in Hong Kong, up from Friday's close of $1,334.00-$1,335.00.