Asian stock markets rose Monday, with analysts attributing the improved investment mood to the withdrawal of Lawrence Summers as a candidate to head the U.S. Federal Reserve. The dollar fell.
The White House said Sunday that Summers, who was considered the leading contender to succeed Fed chairman Ben Bernanke, was no longer seeking President Barack Obama’s endorsement. That leaves the door open for other candidates, including Fed vice chair Janet Yellen.
Analysts said Summer was perceived as unenthusiastic about Bernanke’s aggressive bond-buying program, dubbed quantitative easing, which helped push down interest rates to spur lending and jumpstart economic growth following the financial and economic crisis five years ago. The program has also weakened the dollar and boosted stock markets. Investors in equities want to see it continue.
“Summers, rightly or wrongly, has been perceived not to favour QE … Accordingly, markets have ‘celebrated’ his exit from Fed Chair contention,” said Vishnu Varathan of Mizuho Bank Ltd. in Singapore in a commentary.
As early as this week, the Fed is expected to scale back its $85 billion-a-month in Treasury and mortgage bond purchases. Those purchases have been designed to keep long-term loan rates low to get people to borrow and spend and invest in the stock market. Yellen has been a supporter of quantitative easing.
Summers’ withdrawal followed a growing chorus of criticism about his suitability for the Fed job, including from some members of the Senate committee that would need to back his nomination. As former director of the National Economic Council, Summers helped steer the U.S. through the financial crisis early in Obama’s term. But he was also the target of critics who felt he was too cozy with Wall Street.
Hong Kong’s Hang Seng rose 1.3 percent to 23,214.49. South Korea’s Kospi advanced 0.6 percent to 2,006.74. Australia’s S&P/ASX 200 gained 0.6 percent to 5,249.70. Markets in Japan were closed for a public holiday.
Stocks rose broadly Friday, giving the Dow Jones industrial average its best week since January. The market got a lift from two economic reports, one showing that inflation remained tame in August and the other showing that Americans spent more at stores last month.
The Dow rose 0.5 percent to close at 15,376.06. The Standard & Poor’s 500 added 0.3 percent to 1,687.99. The Nasdaq composite rose 0.2 percent to 3,722.18.
Benchmark oil for October delivery was down 75 cents to $107.46 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 39 cents to close at $108.21 a barrel on the Nymex on Friday.
In currencies, the euro rose to $1.3369 from $1.3294 late Friday. The dollar fell to 98.85 yen from 99.35 yen.