Asian stock markets rally on new bail out hopes
The Stock market in Asia are rallying with fresh hopes of new bail out packages. The gains in the region picked up due to the government pledges worldwide to bail out their financial sector, along with efforts to inject liquidity. New measures are expected to fend off the worst financial crisis since the Great Depression.
After several countries in Asia, in the weekend South Korea promised $130 billion in state guarantees and capital injections, while the Dutch government said it would prop up financial group ING with around 10 billion euros.
ASIAN stocks rose for the first session in four on Monday as South Korea became among the latest governments to prop up its banking sector, causing safe-haven investments such as bonds to lose some of their recent lustre.
European shares were set to join the Asian rally after European Central Bank President Jean-Claude Trichet pledged efforts to restore confidence to financial markets.
The yen, a currency that recently attracted safe-haven bids, reversed course and fell, hit as well by expectations central bank measures to inject liquidity would soon help provide some stability, especially in beleaguered short-term money markets.
Oil prices rose nearly $2 to above $73 (S$107.76) a barrel on expectations Opec will announce an output cut after its emergency meeting later this week.
'A slew of recent policy actions worldwide has provided some relief to the banking sectors in the major economies,' said Mr Kengo Suzuki, a currency strategist at Shinko Securities in Tokyo.
'But the state of the market remains very fragile with worries mounting about the global economy and emerging markets,' Suzuki said.
The MSCI index of Asia-Pacific stocks outside Japan rose 3.72 per cent as of mid-afternoon in Asia, marking its first gain in four sessions. The index is still down about 50 per cent so far this year.
Japan's Nikkei average surged 3.6 per cent.