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BEIJING, Sept. 29 (AP) Asian stocks followed Wall Street higher on Thursday after the Bank of England took strong action to stem a budding financial crisis.
Market benchmarks in Hong Kong, Seoul and Sydney rose more than 1 percent. Shanghai and Tokyo also rose. Oil prices edged lower after rising more than $3 a barrel the previous day.
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Wall Street’s benchmark S&P 500 surged 2 percent on Wednesday, its biggest gain in seven weeks, after the Bank of England announced it would buy as much government bonds as possible to restore order to financial markets.
That has helped calm investor fears that Britain’s tax cuts will push up already high inflation.
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That sent the value of the pound to its lowest level since the 1970s, and bond prices tumbled.
“The risk of a major financial accident in the short term has been reduced,” Invesco’s David Chao said in a note. “The focus will return to the still-pressing macro challenges facing major economies.”
The Shanghai Composite rose 0.8 percent to 3,068.87 and Tokyo’s Nikkei 225 gained 0.6 percent to 26,341.76. Hong Kong’s Hang Seng rose 1.3 percent to 17,477.97.
Seoul’s Kospi gained 1.1% to 2,193.82 and Sydney’s S&P ASX 200 gained 1.6% to 6,566.80.
New Zealand and Southeast Asian markets also rose.
Wall Street’s S&P 500 rose to 3,719.04 after the Bank of England said it would buy bonds over the next two weeks to stem a slide in prices.
Investors were jittery about a 45 billion pound ($48 billion) tax cut plan, but did not cut spending.
The central bank earlier warned that the collapse in confidence in the economy poses “a significant risk to UK financial stability”.
The International Monetary Fund has taken the rare step of urging a member of the Group of Seven advanced economies to abandon plans to cut taxes and increase borrowing.
The Dow Jones Industrial Average rose 1.9% to 29,683.74. The Nasdaq Composite rose 2.1 percent to 11,051.64.
Despite Wednesday’s gains, the S&P 500 is down more than 20% from its Jan. 3 record, putting it in what traders call a bear market.
Forecasters expect more turbulence ahead amid fears of a possible recession, higher interest rates and even higher inflation.
The yield on the 10-year U.S. Treasury note, the difference between its market price and its hold-to-maturity payout, briefly topped 4% on Wednesday, its highest level in 10 years.
Investors are growing increasingly concerned that sharp interest rate hikes by the Federal Reserve and European and Asian central banks this year to cool multi-decade high inflation could tip the global economy into recession.
Investment giant Vanguard predicts that if the Fed delivers on its forecast, it will raise interest rates again and continue to raise interest rates next year, with a 25 percent chance of a U.S. recession this year and 65 percent next year.
In energy markets, U.S. benchmark crude fell 32 cents to $81.83 a barrel in electronic trading on the New York Mercantile Exchange.
The contract surged $3.65 to $82.15 on Wednesday. Brent crude, the basis for international oil prices, fell 30 cents to $87.75 a barrel in London. It rose $3.05 to $89.32 in the previous session.
The dollar rose to 144.32 yen from 143.96 yen on Wednesday. The euro fell to 96.82 cents from 97.43 cents. (AP)
(This is an unedited and auto-generated story from the Syndicated News feed, the body of the content may not have been modified or edited by LatestLY staff)
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