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HONG KONG: Asian markets rallied on Tuesday after Federal Reserve Chairman Ben Bernanke warned the US economy was still fragile and would keep easy monetary policy in place.
While his comments played down recent strong jobs growth figures, traders on Wall Street jumped on them, and the prospect of more dollars floating around the market sent the greenback lower against the euro.
Tokyo climbed 1.75 percent by the break, Hong Kong jumped 1.33 percent, Sydney rose 0.83 percent, Shanghai added 0.27 percent and Seoul was 0.58 percent higher.
Bernanke said Monday that the central bank would likely keep stimulative policies in place despite improvements to the jobs market.
“A wide range of indicators suggests that the job market has been improving, which is a welcome development indeed,” he said in a speech on the outskirts of Washington.
However, he said “conditions remain far from normal”, adding that “we cannot yet be sure that the recent pace of improvement in the labour market will be sustained”.
He said “improvements in the unemployment rate will likely require a more-rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies.”The Fed has held interest rates at record lows since the global financial crisis while it has also bought US bonds to force down long term rates.
There had been talk that recent falls in unemployment could lead the bank to start tightening policy as early as the second half of this year.
“Basically Bernanke lit a flame under the market and we've seen risk on,”said Macquarie Equities Investment Advisor Brad Gordon in Auckland, according to Dow Jones Newswires.
On Wall Street the Dow rose 1.23 percent, the S&P 500 gained 1.39 percent and the tech-rich Nasdaq added 1.78 percent.
The euro surged against the dollar in New York trade, with the European unit also getting support from the closely watched Ifo index of business confidence, which rose for a fifth straight month to its highest level since July 2011.
The common currency jumped to $1.3356 late Monday, from $1.3262 earlier in Asia.
In Tuesday morning trade in Tokyo it was at $1.3352. It was also slightly higher at 110.76 yen, compared with 110.68 yen. The dollar was at 82.97 yen from 82.87 yen.
On oil markets New York's main contract, West Texas Intermediate for delivery in May, gained one cent to $107.04 per barrel while Brent North Sea crude for May settlement was down nine cents at $125.56.
Gold was at $1,687.76 an ounce at 0255 GMT, compared with $1,661.40 late Monday.
