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Asian shares mostly higher on U.S. commitment to low rates

Published 06/19/2014, 12:14 AM
Updated 06/19/2014, 12:18 AM
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Investing.com - Tokyo shares hit a three-month high and other Asian bourses gained on Friday as markets mostly gained on assurances by the U.S. Federal Reserve of continued low interest rates.

The S&P 500 closed Wednesday at a record after Fed Chairwoman Janet Yellen gave a relatively upbeat assessment of the economy.

The Nikkei 225 rose 1.4% and the first time that the index has traded above 15,300 since March 7.

Shares in Sharp Corp. (TOKYO:6753) jumped 4.5% in Tokyo after the firm announced that it had developed an LCD panel that can be cut into any shape, which could potentially pave the way for a wide range of applications.

Also supporting regional sentiment were comments from Chinese premier Li Keqiang that China would avoid a hard landing to hit its 7.5% growth target this year.

In China, Hong Kong's Hang Seng Index added 0.1% and the Shanghai Composite was 0.2% lower.

The S&P/ASX 200 added 1% in Australia with spot iron-ore prices up 1% to $90.30, helping BHP Billiton Ltd (ASX:BHP) and Fortescue Metals Group Ltd (ASX:FMG) gain 2.3% and 3.4% respectively.

Elsewhere in Asia, South Korea's KOSPI was up 0.3%.

Overnight, U.S. stocks rose after the Federal Reserve cut its monthly bond-buying stimulus program by $10 billion to $35 billion due to a rebounding economy.

The Dow 30 rose 0.58%, while the NASDAQ Composite index rose 0.59%.

The Federal Reserve on Wednesday said it was leaving its benchmark interest rate unchanged at 0.00-0.25% but said it would cut its monthly bond-buying program to $35 billion from $45 billion due to improvements taking place in the economy, which drew applause on Wall Street.

"Information received since the Federal Open Market Committee met in April indicates that growth in economic activity has rebounded in recent months. Labor market indicators generally showed further improvement. The unemployment rate, though lower, remains elevated," the Fed said in its statement.

"Household spending appears to be rising moderately and business fixed investment resumed its advance, while the recovery in the housing sector remained slow."

Stocks also rose after the Fed said it would keep benchmark interest low for quite some time after stimulus programs end, which boosted stocks with hopes that borrowing costs will stay low for the foreseeable future.

"The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run."

On Thursday, the U.S. is to publish the weekly report on initial jobless claims as well as a report on manufacturing activity in the Philadelphia region.

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