Asia stocks have best day in 11 yrs on Fed QE

NEW DELHI: The US Federal Reserve's unprecedented bond-buying programme has thrown a lifeline to Asian equities as the dollar's reversal eased concerns over capital flight from the region and fueled risk appetite.


The MSCI Asia Pacific Index rallied as much as 4.8% in Hong Kong on Tuesday, set for the most since October 2008. Still, the gauge had dropped 18% in March so far, on track for the worst month since October 2008. South Korea stocks jumped 8.6% after the nation doubled its emergency funds, while

Japan

's bluechip measure Nikkei rose 7.1%, the most since 2016. Hong Kong's Hang Seng Index was also up more than 4%.

It is a sharp contrast to a sea of red for Asian equities on Monday that saw record losses for India and New Zealand benchmarks after announcements on nationwide lockdowns. The Fed's unlimited quantitative easing prompted traders to return to risk assets, sending almost all Asian Pacific currencies including the Australia dollar and the

South Korean

won jumping.

"The Fed's latest round of stimulus is a gamechanger," said

Edward Moya

, a senior market analyst at OANDA. "The Fed has delivered three huge acts in March and this latest one should satisfy everyone, including President Trump." Most risk assets rose on Tuesday and the dollar snapped a 10-day rally. Yet some market veterans including

Mark Mobius

warned that volatility can continue in Asian equities.

"As the economic impact of the shutdowns around the world begin to work their way through the economics we can expect more volatility," Mobius said. "Our research indicates that the average length of a bear market is a little less than two years," he said.

Euro stocks’ jump highest since ’08
European equities posted their biggest one-day gain since late 2008 as investors turned more optimistic about stimulus measures to combat the economic fallout from the coronavirus. The Stoxx 600 Index rose 8.4%. Germany’s DAX Index jumped 11%. The FTSE 100 and CAC 40 were both up more than 8%.

“Although calling a bottom is a tricky endeavour, we believe we’ve experienced a majority of the losses for this drawdown,” said Jeff Schulze, investment strategist at ClearBridge Investments.

While European stocks have tumbled since a peak in late February on mounting worries about the spread of the virus, unprecedented stimulus measures by central banks from Europe to the US have tempered losses.

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