Asian stocks climb as ECB chief vows to save euro
BANGKOK: Asian stocks charged higher Friday after the European Central Bank chief vowed to save the euro currency union from the continent’s debt crisis and Samsung Electronics reported another record quarterly profit.
Markets have been rattled this week by fears that Spain, the fourth-largest economy among the 17 that use the euro, could need a bailout along the lines of Greece, Ireland and Portugal because its borrowing rates are high. That would strain Europe’s finances and potentially cause the break-up of the euro.
But sentiment turned brighter after the ECB’s chief Mario Draghi pledged that would not happen, asserting Thursday that ”the ECB is ready to do whatever it takes to preserve the euro.”
That could involve buying government bonds to lower the borrowing rates of financially stumbling countries such Spain and Italy. European stocks surged. France’s CAC 40 jumped 4.1 per cent and Spain’s IBEX 35 vaulted 6.1 per cent.
IG Markets strategist Stan Shamu said hopes for ECB action will remain elevated ahead of its scheduled Aug 2 meeting.
”With renewed hopes that the ECB will take further action to address the crisis, regional markets are facing the prospect of a positive finish to the week,” he said in an emailed commentary.
Asian markets also got a boost after Samsung reported another record-high quarterly profit as customers flocked to Galaxy smartphones, helping it outdo rivals even at a challenging time for the global tech industry. Samsung Electronics rose 3.2 per cent in Seoul.
Japan’s Nikkei 225 stock average was up 1.1 per cent at 8,534.81 and Hong Kong’s Hang Seng added 1.8 per cent to 19,234.36. Australia’s S&P/ASX 200 rose 1.2 per cent to 4,196.30. South Korea’s Kospi climbed 2.3 per cent to 1,823.01 while the Shanghai Composite shed 0.2 per cent to 2,122.61.
Wall Street was also boosted by Draghi’s comments despite disappointing earnings.
The Dow Jones industrial average on Thursday jumped 212 points, or 1.7 per cent, to 12,888. The broader the Standard & Poor’s 500 index rose for the first time in five days. It was up 22.13 points, or 1.7 per cent, to 1,360.02. The Nasdaq composite index rose 39.01 points, or 1.4 per cent, to 2,893.25.
In energy markets, benchmark crude was up 31 cents at $89.70 in electronic trading on the New York Mercantile Exchange. The contract crude rose 42 cents to finish at $89.39 in New York on Thursday.
The euro was up 0.1 per cent at $1.2290. The dollar fell 0.1 per cent to 78.23 yen.