Asian shares joined in a global rally Thursday, soaring early as investors welcomed central banks’ coordinated moves to ease dollar credit costs in Europe, as well as monetary easing in China.
Japan’s Nikkei Stock Average JP:NIK +2.21% climbed 2.4%, while South Korea’s KospiKR:0100 +3.77% climbed 3.4% and Australia’s S&P/ASX 200 index AU:XJO +2.48% jumped 2.4%.
U.S. and European stocks ended Wednesday with strong gains, with the Dow Jones Industrial Average DJIA +4.24% rising by the largest margin since 2009. Read more on U.S. stock market action.
The U.S. Federal Reserve and the central banks of the euro area, Canada, the U.K., Japan and Switzerland announced Wednesday that they had agreed to reduce the cost of offering dollar financing through swap arrangements.
“As Europe dithered, monetary policy makers acted, even if their ‘actions’ have more symbolism than significance,” said strategists at RBC.
“Markets breathed a huge sigh of relief,” they said.
As the risks to global funding markets diminished, banks moved higher, with Westpac Banking Corp. AU:WBC +2.67% WEBNF +7.65% up 2.4%, and National Australia Bank Ltd.AU:NAB +2.61% NAUBF +4.59% up 2.1%.
In Japan, Mitsubishi UFJ Financial Group Inc. JP:8306 +3.35% MTU +3.60% jumped 4%, and Nomura Holdings Inc. JP:8604 +3.23% NMR -0.89% climbed 4.8%.
Meanwhile, commodity futures surged in New York after the People’s Bank of China cut its reserve requirement ratio for large banks by 50 basis points, to 21%, effective Dec. 5.
Commodity-linked stocks climbed sharply, with Rio Tinto Ltd. AU:RIO +4.53% RIO +0.58% up 4.7%, BHP Billiton Ltd. AU:BHP +4.12% BHP -1.56% climbing 4.2% and Fortescue Metals Group Ltd. AU:FMG +5.51% FSUMY +3.80% jumping 4.1% in Australia.
Steel makers surged in Japan, with JFE Holdings Inc. JP:5411 +6.05% [ JFEEF +4.41% , up 6.1%, and Nippon Steel Corp. JP:5401 +4.92% NISTF +6.12% adding 4.9%.
China’s move marked the first time the central bank had cut the reserve ratio for such lenders since December 2008, and followed a modest easing for small rural lenders last month.
“The move will ease constraints on bank lending — the level of excess reserves had dropped very low. Specifically, the cut has the same impact on banks’ ability to lend as the injection of $63 billion of base money,” said Mark Williams, chief Asia economist, at Capital Economics.
Hong Kong-based economists at Nomura said that the fact the central bank eased policy wasn’t surprising, but added that the timing was unexpected, with Nomura having expected such a cut in January.
“The need for coordinated policy action with other central banks may have triggered the reserve requirement ratio cut. We believe the fact that the [required reserve ratio] cut occurred [Wednesday], together with actions from other major central banks, did not happen by chance,” they said.
Adding to the positive tone for Asian markets, data out from the U.S. continued its recent strong run, with a private-sector employment report showing a rise of 206,000 jobs in November, the biggest jump since last December last year. See report on private-sector employment data.
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