Asian stocks extended gains for a third consecutive session on Thursday, boosted by hopes of fresh stimulus measures from the U.S. and European policymakers even as the European Central Bank resisted calls for a rate cut. ECB President Mario Draghi kept interest rates unchanged yesterday, but stressed that the central bank stands ready to fix any "increased downside risks" to growth. Draghi also downplayed concerns over growth, saying he expects the economy recover gradually later this year.
Hopes of strong action by Fed Chairman Ben Bernanke were lifted by comments from Atlanta Federal Reserve President Dennis Lockhart yesterday, who emphasized on extending Operation Twist, a program which is set to expire at the end of this month. Bernanke's testimony before the joint economic committee later in the day may provide some clues to whether the Federal Reserve is mulling over a third round of bond buying.
Reports of a bailout plan for Spanish banks and figures showing strong jobs growth in Australia in May also drove investors to unwind bets on safe-haven currencies like the U.S. dollar, while commodities erased initial gains. Traders await the outcome of a Spanish government bond auction taking place today for additional clues to the eurozone's economic outlook.
Japanese shares extended gains for the third straight day, as expectations that the ECB and the Fed will introduce announce policy measures to boost growth kept investor sentiment upbeat. The Nikkei average ended 1.2 percent higher, while the broader Topix index climbed 1.7 percent.
Exporters such as Shin-Etsu Chemical, Canon, Mazda Motor and Panasonic rallied 3-4 percent as the yen softened against the dollar and euro. Shipping firm Mitsui O.S.K. Lines rose 2.3 percent as increasing expectations regarding further policy action globally outweighed global growth concerns.
Among financials, Mitsubishi UFJ Financial Group rose 2.9 percent on a brokerage upgrade, Nomura, Japan's largest brokerage firm, advanced 3.8 percent and Daiwa Securities Group added 3.9 percent. KDDI edged up 0.8 percent on a Nikkei report of an operating profit increase in its fixed-line communications business in the year ending March 2013. Heavy Fast Retailing fell 2 percent, weighing on the market to some extent.
Chinese shares bucked the regional uptrend, with the benchmark Shanghai Composite losing 0.7 percent to end at a two-month low on concerns of a weakening domestic economy. Hong Kong's Hang Seng index rose 0.9 percent, extending gains for a third consecutive session.
Australian stocks rose sharply, with retailers rallying following the release of an upbeat employment report for May. Retailers Myer and David Jones jumped 4-5 percent, global miner BHP Billiton rose 1.5 percent, rival Rio Tinto added 2.2 percent and the big four banks ended up between 1.2 percent and 2.2 percent. Both the benchmark S&P/ASX 200 index and the broader All Ordinaries index rose about 1.3 percent each.
Data from the Australian Bureau of Statistics showed that the economy added 38,900 jobs in May - blowing past expectations for a flat reading after adding 15,500 jobs in April. The unemployment rate came in at a seasonally adjusted 5.1 percent in May - unchanged from the previous month and in line with forecasts. The jobs report came after GDP data on Wednesday showed the economy expanded at more than twice the pace economists forecast in the first quarter.
South Korea's Kospi average soared 2.6 percent to a one-week high, as stocks joined a global rally the day before when the local market was closed in observance of the Memorial Day holiday. Large-cap technology shares led the gainers with Samsung Electronics climbing 5.2 percent after it unveiled notebook and tablet computers running on Windows 8 on the opening day of Asia's leading IT fair in Taipei Tuesday.
SK Hynix rallied 4.2 percent, LG Display jumped 6.4 percent and LG Electronics advanced 3.4 percent. Daewoo Shipbuilding & Marine Engineering rose 2.7 percent after a consortium comprising the company and French oil and gas group Technip SA won an order from Petronas to build a liquefied natural gas storage unit. Hyundai Heavy Industries gained 3.8 percent and Samsung Heavy Industries added 3.5 percent.
New Zealand shares rose modestly, with companies exposed to the Australian economic pacing the gainers, in the wake of the surprisingly strong GDP data yesterday and an upbeat employment report today. The benchmark NZX-50 index rose 0.3 percent. Children's clothing chain Pumpkin Patch, which derives most of its income from Australia, climbed 3.5 percent and jeweler Michael Hill International advanced 2 percent, while lenders ANZ and Westpac rose 2-3 percent. Building products maker Steel & Tube plunged 5.5 percent reacting to the news that the stock would be excluded from the NZX index effective June 18.
India's benchmark Sensex was last trading up about a percent, as the rupee dropped below 55 to the dollar reflecting a return of appetite risk. Besides global cues, talks of the government giving a big push to infrastructure development also bolstered sentiment.
Elsewhere, Malaysia's KLSE Composite was up 0.4 percent and the Taiwan Weighted average edged up 0.3 percent, while Indonesia's Jakarta Composite and Singapore's Straits Times index were down marginally.
On Wall Street, stocks also rallied sharply overnight, recovering further from the sell-off seen in recent weeks, with optimism about further stimulus from the world's central banks underpinning sentiment. The Dow and the tech-heavy Nasdaq jumped 2.4 percent each, while the S&P 500 added 2.3 percent.
by RTT Staff Writer
For comments and feedback: firstname.lastname@example.org