SEOUL: Asian stocks were mostly higher Wednesday as a rebound in U.S. home construction data and a surprise announcement by the European Central Bank to frontload bond buying sent the greenback higher, giving a boost to Asian exporters.
Japan’s Nikkei 225 rose 0.7 per cent to 20,170.51 and South Korea’s Kospi gained 0.6 per cent to 2,133.31. China’s Shanghai Composite Index advanced 1.3 per cent to 4,476.09. Stocks in Australia and in most Southeast Asian countries were higher. But Hong Kong’s Hang Seng was down 0.3 per cent to 27,629.50. Markets in Singapore and Taiwan were lower.
The U.S. Commerce Department said housing starts last month increased 20.2 per cent to a seasonally adjusted annual rate of 1.14 million homes. That pace ranked as the fastest clip since November 2007. The report that the U.S. homebuilders ramped up construction in April to the fastest pace in nearly seven-and-a-half years gave newfound momentum for an economy that has struggled in recent months.
“This makes a welcome relief from the run of generally soft data on the U.S. economy for March and April,” Ric Spooner, chief analyst at CMC Markets, said in a commentary. “However, the good news on housing starts brings with it the prospect of rising interest rates.”
Benoit Coeure, a top European Central Bank official, said the bank will boost May and June bond purchases intended to stimulate the eurozone’s economic recovery, so the bank can buy less in July and August when bond market trading slows down. The purchases are aimed at raising the rate of inflation from zero, considered too low, toward the bank’s goal of just under 2 per cent. European stock markets rallied after the announcement while the euro depreciated and the dollar gained.
