BANGKOK (AP) — Asian stock markets rose Thursday as a weakening yen propelled Japan's benchmark higher. A new bond-buying program by the U.S. Federal Reserve and commitment to keep interest rates low also soothed investor nerves about the state of the world's biggest economy.
Following a two-day policy meeting, the Fed said Wednesday it will keep spending $85 billion a month on bond purchases to drive down long-term borrowing costs and stimulate economic growth. The Fed will spend $45 billion a month on long-term Treasury purchases to replace "Operation Twist," a previous bond-purchase program of an equal size. And it will keep buying $40 billion a month in mortgage bonds.
Those purchases, and the Fed's revamped commitment to keep interest rates low until unemployment falls to a more normal level, are intended to spur borrowing and spending in an economy still growing only modestly since the financial crisis of 2008.
Tokyo's Nikkei 225 index jumped 1.8 percent to 9,755.82 as the yen sank to an eight-month low against the dollar, a boost for Japan's export-reliant economy. Hong Kong's Hang Seng was nearly unchanged at 22,503. South Korea's Kospi added 0.7 percent to 1,990.08. Australia's S&P/ASX 200 gained less than 0.1 percent at 4,583.90.
Besides a spur in borrowing, the Fed's drive to cut rates also induces investors to shift money out of low-yielding bonds and into stocks, analysts said.
"The long-term yields will remain low, so this is definitely a good thing for the U.S. economy, and it's also a positive sign for the Hong Kong stock market. We can clearly see capital inflows to Hong Kong in the past month," said Dickie Wong, executive director of research at Kingston Securities Ltd. in Hong Kong.
"Investors are looking for other places to put money," Wong said. "If you put your money into a savings account, there's no interest at all. For investors in Hong Kong, there is a hunger for yield."
Wall Street finished little changed despite the Fed's announcement as critical budget negotiations in Washington appear to have stalled.