KUALA LUMPUR, Malaysia (AP) — Asian stock markets bounced higher Thursday after prepared testimony for the confirmation hearing of incoming Federal Reserve chief suggested the U.S. central bank won't reduce its economic stimulus until March next year or later.
Janet Yellen, who is slated to replace Ben Bernanke as Fed chairman at the end of January, will testify before the Senate banking committee later Thursday. Analysts said her published introductory remarks were a boost for stock markets that have been propelled higher since the aftermath of the 2008 financial crisis by the Fed's super-low interest rate and bond buying policies.
While there was progress in the U.S. recovery, Yellen said the labor market and economy are "performing far short of their potential." She said unemployment was still too high and inflation still below target. She reiterated the world's No. 1 economy must show continued signs of improvement before the Fed starts tapering off its $85 billion of monthly bond purchases.
"That statement alone has changed the landscape of trade today," said Evan Lucas, market strategist with IG in Melbourne, Australia. It suggests the bond buying effort, which has kept commercial interest rates low to encourage borrowing and investment, will be kept in place at current levels until the end of the first quarter of next year, he said.
After stronger-than-expected U.S. hiring reported last week, some analysts had thought the Fed would start reducing its stimulus in December or January.
Tokyo's Nikkei 225 surged 2.5 percent to 14,929.58 and South Korea's Kospi was up 0.6 percent at 1,975.93.
China's Shanghai Composite rose 0.5 percent to 2,097.38 and Hong Kong's Hang Seng gained 0.9 percent to 22,660.44. Benchmarks in Australia, Taiwan and Singapore also rose.
Mizuho Bank Ltd. in Singapore, however, said in a market commentary that tapering in December wasn't out of the picture as recent upbeat data pointed to a U.S. recovery.
It is also unclear if Yellen can justify maintaining the bond purchases at the current pace amid high government debt, analysts said.
On Wall Street, markets hit record highs Wednesday after department store chains gave optimistic forecasts for holiday sales.
The Standard & Poor's 500 index rose 0.8 percent to 1,782, its 34th record close this year. The index is up 25 percent this year. The Dow Jones industrial average gained 0.5 percent to 15,821.63, also a record.
In energy markets, benchmark crude for December delivery was flat at $93.88 in electronic trading on the New York Mercantile Exchange. The contract gained 84 cents to close at $93.88 on Wednesday.
The euro dropped to $1.3466 from $1.3488 late Wednesday. The dollar rose to 99.69 yen from 99.13 yen.