Solid figures from China, Europe shore up markets
AP and AFPLONDON/ HONG KONG--Solid economic figures out of China and Europe helped lift the mood in financial markets Thursday in a week when investors have been largely fretting over when the U.S. Federal Reserve will start to reduce its monetary stimulus.
August 23, 2013, 12:01 am TWN
Though the minutes to the last Fed policy meeting, published Wednesday, showed most officials appeared comfortable with the idea of starting to reduce the stimulus this year, there was less clarity over whether the so-called tapering will begin in September or December.
Better-than-expected figures out of China and Europe helped investors to focus on something different.
A survey from HSBC provided further evidence that China, the world's second-largest economy, may be over its recent soft patch. Its monthly purchasing managers' index — a gauge of business activity — rose to 50.1 points for August from July's 47.7. Numbers above 50 indicate an expansion in activity.
The data suggests the under-pressure economy may be about to turn a corner.
It will also provide some respite for regional economies, which rely heavily on China as a source of growth at home.
The monthly composite PMI, which includes both manufacturing and services, for the 17-country eurozone rose to 51.7 in August from 50.4. The index, published by financial information company Markit, is now at its highest level since June 2011 and provides further evidence that the eurozone recovery from recession is gathering pace.
In Europe, the FTSE 100 index of leading British shares was up 0.8 percent at 6,443 while Germany's DAX rose 1 percent to 8,370. The CAC-40 in France was also 1 percent higher at 4,053.
Wall Street was poised for a solid session after a bad few sessions, with Dow futures up 0.3 percent and the broader S&P 500 futures 0.4 percent higher.
Meanwhile in Asia, in share trading Jakarta ended down 1.11 percent, or 47.04 points, at 4,171.41. Kuala Lumpur lost 1.40 percent, or 24.48 points, to close at 1,720.37 while Bangkok lost 0.25 percent, or 3.33 points, to 1,351.81.
Mumbai however closed 2.27 percent up, or 407.03 points to 18,312.94, snapping four straight days of declines as dealers picked up bargains after recent losses.
Manila slumped 5.96 percent as the market played catch-up with the rest of the region after being closed for four days owing to severe flooding and a public holiday. The composite index gave up 389.22 points to 6,136.73.
The Fed has been purchasing US$85 billion of .
Investors were left none the wiser about the Fed's plans for its US$85 billion purchase of financial assets a month to lower interest rates and spur growth. This stimulus is known as quantitative easing (QE), and it has fuelled an investment splurge in emerging Asia over the past year.
Fed chief Ben Bernanke has said QE will remain in place until the US economy can stand on its own feet.