Asia bourses upbeat ahead of Fed meeting

Asian markets rose and the dollar sank against the euro yesterday ahead of a US Federal Reserve meeting most economists expect will deliver fresh stimulus to kickstart the economy. Comments from China’s prime minister hinting at monetary easing also gave a fillip, while traders were confident of a positive verdict in Germany as judges were set to rule on whether Berlin can legally take part in the eurozone’s bailout fund. At 0800 GMT the judges gave the green light to the rescue fund, when most major markets in Asia had closed. Tokyo surged 1.73%, or 152.58 points, to 8,959.96 with better-than-expected July economic data helping to lift sentiment, while Seoul jumped 1.56%, or 30.03 points, to 1,950.03. Sydney was 0.82% higher, adding 35.5 points to 4,361.3, Hong Kong jumped 1.10%, or 217.51 points, to 20,075.39 and Shanghai added 0.28%, or 6points, to 2,126.55. In other markets; Singapore closed up 0.44%, or 13.26 points, at 3,029.66; Taipei rose 1.14%, or 85.32 points, to 7,570.45; Manila closed 0.41% higher, adding 21.05 points to 5,207.10; Wellington rose 1.20%, or 44.76 points, to 3,789.72; Jakarta added 0.45%, or 18.74 points, to 4,174.10; Kuala Lumpur was flat, edging down 0.46 points to 1,613.78; while Bangkok added 0.93%, or 11.64 points, to 1,259.96. The Fed would later begin its two-day policy meeting, after which there is a wide expectation it would unveil new measures to spur growth, with most analysts tipping a third round of bond-buying, or quantitative easing (QE3). “Market sentiment is very positive,” said Brett McGonegal, chief executive officer at Reorient Financial Markets in Hong Kong. “Once people get into the buying mood it is not a one-day event, we could have an overall buying appetite that could absorb a shock,” he told Dow Jones Newswires. Late on Tuesday Chinese Premier Wen Jiabao said the world’s number two economy “was showing signs of stabilising” and would likely meet the 7.5% growth the government set for the year. “We will, according to economic trends, make full use of the advantage of having relatively big space for fiscal and monetary policy (moves),” he said. Wen later emphasised that despite a slowdown in government revenues, the government has about a 1tn yuan ($158bn) surplus on its balance sheet and around 100bn yuan in what he called “stability and adjustment funds”. The government “will not hesitate to use” such money, he said following a speech to the World Economic Forum in the eastern city of Tianjin. The comments suggested Beijing was ready to announce new measures to boost spending in China—a key driver of regional growth—such as lowering the amount of money banks must keep on reserve, or even cutting interest rates. In Germany the country’s Constitutional Court ruled that the European Stability Mechanism (ESM), set up to help under pressure nations, was constitutional, removing a key obstacle to tackling the region’s debt crisis. From gulf times.