Asian markets surged Monday after Washington took over Fannie Mae and Freddie Mac to save the U.S. housing market and limit the extensive damage of the financial crisis. Japan and Australia both gained 3.5 percent, with South Korea soaring 5 percent.
Investors, who have been keeping their portfolios heavy with cash, devoured bank shares and ploughed into most Asia-Pacific currencies as the rescue of the top mortgage finance companies, possibly the biggest U.S. government bailout ever, helped willingness to take risks.
Regional financial stocks surged with Japan's Mitsui Trust & Banking and Australia's Macquarie Group and South Korea's Woori Financial Holding climbing by double digits.
The bailout also saw the U.S. dollar fall against the euro , but climb against the yen in Asian trade. Anticipation of the rescue mission had lifted U.S. financial stocks on Friday after early market losses on data showing the U.S. jobless rate at a five-year high.
Crude oil futures gained more than $2 to top $108 a barrel on worries that Hurricane Ike could threaten Gulf of Mexico production and oil and gas facilities. Expectations that Organisation of the Petroleum Exporting Countries (OPEC) ministers would leave agreed output targets unchanged at a meeting on Tuesday also lent support.
Japan's Nikkei 225 Average finished 3.4 percent higher, posting its biggest percentage gain in five months, with financial shares soaring on the U.S. government's
bailout of mortgage finance companies Fannie Mae and Freddie Mac . Top lender Mitsubishi UFJ Financial Group and No.2 Mizuho Financial Group rose by their daily limit, and a dozen other financial shares topped the list of gainers on the Nikkei. Japanese banks have a roughly $56 billion exposure to Fannie and Fannie corporate bonds and the bailout boosted investor confidence in banks. Canon and other exporters powered higher on a softer yen and improved investor sentiment, leading the benchmark to erase the sharp losses it booked on Friday on the gloomy outlook for the global economy.
South Korea's KOSPI closed more than 5 percent higher, their biggest gain in a year, as credit worries eased, sending banks soaring. Banking issues led the rally with Kookmin Bank and Shinhan Financial Group both ending sharply higher.
Australia's S&P/ASX 200 Index gained 3.9 percent, the biggest one-day gain in nearly six
months. Shares in takeover target Origin Energy climbed almost 13 percent after U.S. energy giant ConocoPhillips agreed to pay up to A$9.6 billion (US$8 billion) for a 50 percent stake in a joint venture project.
Hong Kong shares closed more than 4 percent up, rebounding from a 17-month low. Shares in HSBC Holdings, Europe's largest bank, jumped 4.5 percent while mainland Chinese banks which own bonds issued by the beleaguered home financiers, also pushed ahead. China Construction Bank and ICBC both added more than 4 percent higher.
Singapore's Straits Times Index surged 4.6 percent with banks such as DBS Group and OCBC advancing over 3 percent higher. Shares of Southeast Asia's largest property developer CapitaLand leapt as much as 9.5 percent helped by improved market sentiment.
China's Shanghai Composite Index was the only market to buck the trend, falling 2.7 percent because of concern about a slowing Chinese economy and heavy supplies of fresh equity. In an effort to improve the market's supply/demand balance, the securities regulator announced late on Friday that it would allow institutions to issue bonds exchangeable into shares, as an alternative to outright sales of shares made tradable by the expiry of lock-up periods.