Asia Stocks Rise, Following Wall Street's Lead

Asia Stocks Rise, Following Wall Street's Lead

Asian stocks rose Thursday, following a surge on Wall Street that came after hints the U.S. Federal Reserve is backing off an interest rate hike.

U.S. stocks snapped a week-long losing string Wednesday with key indexes up about 4 percent.

The Dow Jones Industrials, which had suffered double-digit declines over the last five sessions, soared 619 points Wednesday, the third-highest point gain in its history.

Global stocks have been in a freefall for the past two weeks on worries about China’s slowing economy.

China’s central bank raised interest rates this week to pump more money into the economy, but is unclear to what extent the move will help stabilize Chinese stocks.

Volatile trading

Thursday saw another volatile day of trading in China.

In the last hour of trading, the benchmark Shanghai Composite Index swung from a loss to close 5.3 percent higher. That was the index's biggest one-day gain in eight weeks.

Tokyo, Sydney and Seoul also closed the day up about 1 percent, while European shares also rose at opening Thursday.

Traders at the New York Stock Exchange said it’s not China’s slowing economy as much as it is China’s lack of transparency that’s making investors nervous.

Trader Stephen Guilfoyle told VOA that investor psychology has been more about caution than panic.

However, Alan Valdes at DME Securities blamed the market volatility on lower volumes typical of the summer months, coupled with uncertainty and eroding confidence about Beijing’s monetary policies.

Currency value

Another concern is the value of China's currency. Beijing unexpectedly allowed the yuan to weaken earlier this month, raising concerns Beijing was worried about its exporters, which have helped drive its massive economic growth.

On Thursday, China's central bank set its central rate for the yuan at a four-year low, at 6.4085 against the U.S. dollar, or about 0.07 percent weaker than the previous day.

Most analysts predict the volatility will continue until at least September. That’s when many economists believe the U.S. Federal Reserve will start raising interest rates, which have remained near zero since 2009. Lower interest rates help stimulate the economy.

Despite improving U.S. employment and housing data, a voting member of the U.S. central bank raised doubts Wednesday on the timing for a rate hike.

William Dudley, president of the Federal Reserve Bank of New York, said recent turmoil in global markets makes the idea of raising rates next month less compelling.
Asia Stocks Rise, Following Wall Street's Lead Asia Stocks Rise, Following Wall Street's Lead Reviewed by Ajit Kumar on 4:59 PM Rating: 5

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