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Asian Shares Edge Higher On U.S. Optimism

3/14/2012 5:44 AM ET

Asian shares ended mostly higher on Wednesday, with financials spearheading the liquidity-driven rally, as positive U.S. retail sales data and the Federal Reserve's upbeat assessment of the world's largest economy bolstered the global economic outlook.

Favorable stress test results for a number of major U.S. banks and JPMorgan's unexpected dividend hike and stock buyback also helped improve investor appetite for risk. Most U.S. top banks passed their annual stress tests and are in a strong position to weather another recession, the Fed said in a conservative report that underscored the recovery of the financial sector.

Tokyo stocks rose, with the Nikkei average closing above the psychologically important 10,000 mark for the first time in more than seven months, as export-linked shares benefited from a weaker yen and banks posted strong gains, taking cues from their U.S. peers. The Nikkei average rose 1.5 percent while the broader Topix index gained 1.4 percent.

Toyota Motor rose 2 percent and Sony jumped 5.2 percent after the yen dropped to its lowest level in almost 11 months against the dollar, extending its recent weakening trend. Heavily weighted Fanuc gained 2.4 percent. Canon added 3.4 percent on a Nikkei report that the electronics company plans to cut at least 400 billion yen in costs over four years.

Commodity plays surged on the rosier outlook for the U.S. economy. Nippon Steel rose 2.6 percent and Sumitomo Metal Mining advanced 1.8 percent. In the financial sector, Mizuho Financial Group, Resona Holdings, Mitsubishi UFJ Financial Group and Nomura Holdings rose 2-3 percent.

Chinese shares bucked the regional uptrend, with benchmark Shanghai Composite index losing 2.6 percent after Premier Wen Jiabao said that home prices remain far from a reasonable level and the country will continue to focus on curbing speculative demand. Hong Kong's Hang Seng index ended down 0.2 percent, erasing an early gain of as much as 1.4 percent.

Australian shares rose to a two-week closing high, as a strong lead from Wall Street following positive economic data lifted banks and miners. Both the benchmark S&P/ASX 200 and the broader All Ordinaries index rose around 0.9 percent each. ANZ, Commonwealth, NAB and Westpac rose around a percent each after big U.S. banks including JPMorgan Chase and Wells Fargo announced dividend hikes Tuesday.

Most of the largest U.S. banks would be able to maintain their capital levels above a regulatory minimum in an "extremely adverse" economic scenario, the Federal Reserve's annual stress test results released on Tuesday showed, helping banks win Fed approval to raise dividends and buy back shares.

Miners BHP Billiton and Rio Tinto rose 1.3 percent and 1.5 percent, respectively, as copper futures hit one-week high overnight. Fortescue Metals added a percent after the group unveiled plans to launch a $1 billion high-yield bond offering to fund its major expansion plans. Gold miner Newcrest lost 1.8 percent.

In economic news, consumer confidence in Australia took a dip in March as banks started to hike mortgage rates despite the Reserve Bank of Australia keeping the official cash rate on hold, the latest survey by Westpac Institutional Bank and Melbourne Institute showed. The Westpac-Melbourne Institute Index of consumer sentiment fell 5 percent to 96.1 in March from 101.1 in February, with a reading below 100 suggesting that the level of pessimists outnumbered that of optimists.

Seoul shares rallied, with the benchmark Kospi climbing a percent to a seven-month high, lifted by financials on optimism about the world's largest economy. The Fed upgraded its U.S. economic outlook and data showed U.S. retail sales rose at their fastest pace in five months in February, bolstering the global economic outlook. Korea Exchange Bank rallied 3.2 percent and shares of KB Financial Group ended 3.9 percent higher.

Woori Finance soared 4 percent on reports the government has intensified efforts to further reduce its stake in the company. Samsung Electronics rose 2.4 percent after saying it would supply the screens for Apple Inc.'s new iPad. Economy-sensitive shipbuilders gained ground, with Hyundai Heavy, Daewoo Shipbuilding and Samsung Heavy Industries climbing 2-5 percent.

New Zealand shares rose, lifting the benchmark NZX-50 index up 0.8 percent to a nine-month high, as a global rally in equities prompted investors to lap up shares of recently listed companies such as Chorus and Trade Me. Chorus rose 0.6 percent and Trade Me climbed 2.7 percent, hitting new highs. Telecom added 0.6 percent, extending its gains to a new high since the spin-off of Chorus in November.

Pumpkin Patch, the children's clothing retailer, soared 5.8 percent after the company reported a first-half net loss of $30 million following the closure of its underperforming British and American stores. Shares of outdoor equipment retailer Kathmandu jumped around 5 percent ahead of its first-half earnings next week, Fisher & Paykel Appliances, the whiteware manufacturer and exporter, gained 3.2 percent and Fletcher Building, the nation's largest construction company, ended up 1.3 percent.

India's Sensex was last trading up 0.6 percent. Railways Minister Dinesh Trivedi who unveiled his maiden Railway Budget before Parliament today hiked passenger fares for the first time in nine years, with train fares increasing across all classes ranging from two paise to 30 paise per kilometre.

Elsewhere, Indonesia's Jakarta Composite index rose 1.2 percent, Malaysia's KLSE Composite gained 0.8 percent, Singapore's Straits Times added 1.3 percent and the Taiwan Weighted average ended up 1.2 percent.

On Wall Street, stocks rallied overnight as traders reacted positively to retail sales data as well as the Federal Reserve's monetary policy announcement. Investors also cheered European finance ministers' approval of a second bailout for Greece worth 130 billion euros.

The Dow climbed 1.7 percent to reach its best closing level in four years and the S&P 500 jumped 1.8 percent to a three-year high, while the tech-heavy Nasdaq closed above 3000 for the first time since December 2000.

by RTT Staff Writer

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