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Asian Shares Rise On Earnings, Easing Debt Concerns

4/18/2012 5:23 AM ET

Asian shares rose across the board on Wednesday, mirroring a rally in European and U.S. shares overnight, as a stronger-than-expected reading on German ZEW investor sentiment index and a successful Spanish sovereign debt auction soothed worries over Europe's debt crisis. Strong U.S. corporate earnings and an improved IMF forecast for global growth also improved appetite for riskier assets.

The International Monetary Fund yesterday lifted its global growth forecast for 2012 to 3.5 percent from 3.3 percent earlier, saying that the threat of a sharp slowdown has eased due to stronger activity in the U.S. and better policies in the euro area.

Tokyo stocks soared, with the Nikkei average rising 2.1 percent, as remarks by Bank of Japan Deputy Governor Kiyohiko Nishimura fueled expectations of additional monetary easing by the central bank. The Bank of Japan is ready take up further monetary easing if necessary, though the policy decision depends largely on the outlook for economic activity and prices, he said in a speech before business leaders in Okayama. The broader Topix index added 2 percent.

Tech shares gained ground, with Advantest, Tokyo Electron and TDK climbing 2-4 percent, after Yahoo and Intel posted quarterly earnings that topped Wall Street's estimates. Hard-drive maker Seagate Technology Plc also posted a better-than-expected third-quarter profit, as the industry recovers from the floods in Thailand late last year.

Mizuho Financial jumped 3.2 percent and Mitsubishi UFJ Financial added 2.9 percent on positive sentiment after Goldman Sachs Group, the fifth-biggest U.S. bank by assets, reported higher-than-expected quarterly earnings on the back of better- than-projected revenue from investment banking.

China's Shanghai Composite index rallied 2 percent on speculation of an imminent rate cut. China's home prices fell in a record 37 of 70 cities tracked by the government in March, as officials seek to control prices and curb speculation, data released today showed adding to recent concerns about slowing growth in the world's largest economy.

The downbeat data on property prices coupled with declining foreign direct investment into China intensified speculation that Beijing may cut banks' reserve-requirement ratios for a second time this year. Hong Kong's Hang Seng index rose 1.1 percent.

Australian shares rose for the first time in three sessions, with miners leading the rebound, as investors cheered a round of quarterly production reports and the IMF's improved outlook for global growth. The benchmark S&P/ASX 200 rose 1.4 percent, while the broader All Ordinaries index gained 1.3 percent.

BHP Billiton rose 2.8 percent after the mining giant released its third-quarter production report, showing a 14 percent rise in iron-ore production in Western Australia compared to the same quarter a year ago. However, production declined 8 percent from the preceding second quarter due to bad weather and industrial disputes. Shares of Rio Tinto, which reported production data late yesterday, gained 2.8 percent and Fortescue Metals ended up 2.4 percent.

In the financial sector, Commonwealth Bank of Australia added 1.4 percent after former boss Ralph Norris called the federal government's plan to deliver a budget surplus "mindless". ANZ rose 1.1 percent, NAB gained 1.3 percent and Westpac closed 0.4 percent higher. Mall owner Westfield Group jumped 3.4 percent on news that the group will divest eight non-core shopping centres in the U.S. for $1.154 billion.

In economic news, a survey by Westpac Institutional Bank and the Melbourne Institute revealed that the Australian economy would continue to see below-trend growth in the coming three to nine months. The annualized growth rate of the Westpac-MI leading index, which indicates the likely pace of economic activity in the coming three to nine months, was 2.4 percent in February, weaker than the long term trend of 2.9 percent.

South Korea's Kospi average rose a percent, with economy-sensitive shipbuilders pacing the gainers as worries about Europe's sovereign debt crisis receded. Hyundai Heavy rose 1.8 percent, while Samsung Heavy Industries and Daewoo Shipbuilding soared around 6 percent each. Samsung Electronics rallied 3.5 percent, snapping a six-day slide, after the company and Apple Inc. agreed to enter settlement talks to resolve a patent lawsuit over smartphone and tablet technology.

LG Electronics edged up 0.9 percent on news that the U.S. International Trade Commission has ruled in favor of South Korea's major refrigerator makers, in an anti-dumping case brought by their American rival Whirlpool. Hana Financial Group fell 2.5 percent on speculation that it plans to raise capital selling new shares.

New Zealand shares rose, with the benchmark NZX-50 climbing 1.2 percent to its highest level since March 15, as fears over Spain's fiscal health receded and robust U.S. corporate earnings encouraged investors to hunt for bargains in companies that were recently given lower weightings in the benchmark index. Contact Energy rose 2.7 percent and Sky Network Television added 2.5 percent. Heartland New Zealand, the would-be bank, led the gainers on the exchange, climbing 5.3 percent, while NZ Oil & Gas paced the declines, falling 1.3 percent.

Elsewhere, India's benchmark Sensex was up 0.4 percent, Indonesia's Jakarta Composite and Malaysia's KLSE Composite edged up around 0.2 percent each, Singapore's Straits Times added 0.4 percent and the Taiwan Weighted average closed up 0.3 percent.

On Wall Street, stocks rose sharply overnight, as encouraging corporate earnings from the likes of Goldman Sachs Group and Coca Cola and news of a successful Spanish bond auction helped traders shrug off disappointing U.S. economic data on housing starts and industrial production. The Dow ended up 1.5 percent, the tech-heavy Nasdaq climbed 1.8 percent and the S&P 500 added 1.6 percent.

by RTT Staff Writer

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