Asian stock markets rallied strongly as a raft of positive data and noises coming out of the region’s largest economies added to the momentum created last week by a strong US jobs report and the European Central Bank’s latest stimulus package.
India’s benchmark Sensex index surged to the latest in a series of record highs as incoming President Narendra Modi promised to free up sectors of the economy from excessive state control and return it to “a high growth path”.
The Sensex was up 0.8% at 25598.88 by 0400 EDT. It has now risen over 20% this year on hopes that Modi, who won last month’s nationwide elections convincingly on a promise of sweeping economic reform and an attack on corruption, would re-energise the world’s second-largest country by population. Growth has slowed to under 5% in both of the last two years.
Modi has promised to encourage foreign investment and cut the bureaucracy that has delayed big investment projects. He also wants to introduce a nationwide sales tax.
In Hong Kong, meanwhile, the Hang Seng index rose 0.7% after the People’s Bank of China stepped in to reverse the decline of the renminbi. The PBoC fixed the renminbi’s official exchange rate against the dollar 0.22% higher, reversing all its losses against the dollar over the last two months. It has let the currency slide for most of this year, in an effort to avoid a “hard landing'” for the export-driven economy. Recent data have suggested that activity is now picking up again, allowing the authorities to return to their longer-term policy of stimulating domestic demand. A higher renminbi would increase Chinese demand for foreign goods and services.
There was positive news elsewhere in Asia too, as Japan revised up its first-quarter growth data. The government said gross domestic product, which measures the total goods and services produced by an economy, grew 1.6% in the first quarter — an annualized rate of 6.7%, as businesses moved up their spending to avoid being hit by an increase in value added tax that kicked in at the start of April. The government also said that consumer confidence rose to its highest level since January. The Nikkei 225 index rose 0.3% to 15124.00.