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Asian Stocks Levitate as Fed’s Repo Bonanza Continues

Last Updated March 4, 2021 2:40 PM
Sam Bourgi
Last Updated March 4, 2021 2:40 PM

Asian stocks rose on Friday, with Japan’s benchmark index reaching new five-month highs amid reports that the Federal Reserve was pledging more liquidity to prop up the financial markets.

Asian Markets Rise

Stocks across the Asia-Pacific region rose in the final session of the week. Tokyo’s benchmark Nikkei rallied 0.4% and was on track for its highest settlement since late April. The Nikkei is up 6.9% over the past month and 10.6% since the start of 2019.

Japan Nikkei 225
Japan’s Nikkei 225 is closing in on new five-month highs. | Chart: Yahoo Finance

Mainland China’s CSI 300 Index rose 0.2%. The benchmark Shanghai Composite Index also rose 0.2%. In Hong Kong, the Hang Seng Index rallied 0.3%.

The ASX 200 Index, Australia’s primary equities benchmark, was up 0.6% midday.

Fed Carries Out Third Repo Operation; Plans Fourth

The Federal Reserve stepped into the financial markets again on Thursday in another desperate attempt to keep short-term interest rates from rocketing higher.

For a third straight day, the New York Federal Reserve Bank conducted a repurchase operation to ensure local banks have enough liquidity to finance their day-to-day operations. The Thursday repo operation was valued at$75 billion, matching Wednesday’s level and much higher than the $53 billion pledged on Tuesday. All said, the U.S. central bank has injected $203 billion into the markets this week.

Anthony Pompliano, a renowned bitcoin bull and opponent of central-banking, tweeted  late Thursday that the New York Fed was planning a fourth repo operation on Friday worth $75 billion.

“That will be more than $275 billion total in four days this week,” he said.

Prior to this week, the Fed’s last repo operations came in the aftermath of the 2008-09 financial crisis.

U.S. Stock Futures Edge Higher

Futures on U.S. equities traded slightly higher on Friday, pointing to a modest start to the New York session. Dow Jones Industrial Average (DJIA) futures were up 26 points, or 0.1%. S&P 500 futures advanced 0.1%. The Nasdaq 100 mini futures contract was also up 0.2%.