Straits Times Index edges up on hopes of longer United States stimulus

Asian markets rallied on Thursday as traders took joy in news that the United States Commerce Department had slashed its estimate for first-quarter economic growth from 2.4 per cent to 1.8 per cent.

The paradoxical reaction is due to the fact that the market believes a continued weakness in US economic numbers will force the Federal Reserve to maintain its stimulus programme, also known as quantitative easing.

Prospects that the Fed might now have to delay turning off the cash tap helped the local benchmark Straits Times Index rose 13.63 points, or 0.44 per cent, to 3,118.03.

There were also significant gains across the rest of Asia. Tokyo surged 2.96 per cent, Seoul advanced 2.87 per cent and Hong Kong gained 0.5 per cent.

Shanghai spent most of the day in positive territory before closing 0.08 per cent lower on profit-taking.