Asian stocks ended broadly higher on Wednesday, as investors remained cautiously optimistic ahead of the German Constitutional Court ruling and the U.S. Federal Reserve's policy meeting starting later today. The Dow Jones index hit a five-year high overnight and German stocks climbed to a 13-month high in anticipation of a favorable ruling from a German court on bailout funding and further easing from the Federal Reserve. The positive mood carried on into the Asian session as well.
Commodities were narrowly mixed, while the dollar hit a four-month low against a basket of currencies after Moody's warned it could cut the credit rating of the United States if next year's budget talks do not result in a lower debt to GDP ratio.
Reports released just a while before indicated that the German court has allowed ratification of ESM under certain conditions and rejected complaint against the euro zone's new bailout fund.
Japanese shares rallied, as firm overseas cues overnight and better-than-expected core machinery orders data for July outweighed the yen's continued strength against the dollar. With the yen rising to a three-month high against the dollar recently, Japan's finance minister Jun Azumi told reporters that the government has no tolerance at all for speculative movements. "When it is necessary to take decisive steps, I will take them, and when I say that, I mean it," he added.
The Nikkei average jumped 1.7 percent, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange finished 1.3 percent higher. Commodity-related stocks were in focus, with Sumitomo Metal Mining and JFE Holdings rising 3-4 percent. Communications equipment manufacturer Oki Electric Industry plunged 11 percent after the company said it expects a loss of 30.8 billion yen due to accounting improprieties at its Spanish unit.
Core machine orders in Japan rose a seasonally adjusted 4.6 percent from the previous month in July, the Cabinet Office said. That was sharply higher than forecasts for an increase of 2.0 percent following the 5.6 percent jump in June. On a yearly basis, core machine orders increased 1.7 percent - also topping expectations for a contraction of 3.6 percent following the 9.9 percent plunge in the previous month.
China's Shanghai Composite index rose 0.3 percent, with losses in heavyweight banks limiting further upside. Underlying sentiment remained positive after Premier Wen Jiabao gave an upbeat assessment of the nation's economic prospects at the World Economic Forum in Tianjin yesterday. Wen also promised to take fiscal and monetary measures to meet economic goals for the year.
Hong Kong's Hang Seng index advanced 1.1 percent, extending gains for a fifth consecutive session, lifted by commodity stocks and property developers.
Australian shares ended notably higher, led by miners on the back of a rally in iron ore prices. Fortescue Metals climbed 3 percent, while BHP Billition and Rio Tinto, which hit out at the Queensland government's tax slug, edged up 0.8 percent and 1 percent, respectively. Both the benchmark S&P/ASX 200 and the broader All Ordinaries index ended up about 0.8 percent each. Among the major banks, ANZ rose a modest 0.4 percent, while NAB, Commonwealth and Westpac advanced 1-2 percent.
Oil & gas firms ended mixed, with Santos and Oil Search up 1-2 percent, while Woodside slid half a percent. Among retailers, David Jones rose 1.3 percent and Harvey Norman added 2 percent, but JB Hi-Fi declined 1.5 percent. News Corp rose half a percent after the company named Paul Cheesbrough its chief technology officer before the media firm's split into two companies. Fairfax Media shares soared 7 percent after it created a new multi-platform consumer marketing group to manage all its brands in its Metro Media division.
In economic news, Australian dwelling starts rose by 4.6 percent in the June quarter to 34,116, a 4.6 percent rise compared to the previous quarter, according to data released by the Australian Bureau of Statistics. Separately, the latest survey by Westpac/Melbourne Institute showed that consumer sentiment rose 1.6 percent in September.
Seoul shares rallied, with the benchmark Kospi average gaining 1.6 percent to its highest level in nearly four weeks, as investors continued to bet that Fed Chairman will announce further easing measures following the two-day policy meeting on Thursday. Renewed foreign fund buying also lent some support to the market ahead of the Bank of Korea's policy meeting tomorrow.
Heavyweight Samsung Electronics jumped 3 percent to a near four-week high following reports the company is exploring a potential lawsuit against Apple over the release of its new iPhone. Economy-sensitive shipbuilders led the rally, with Daewoo Shipbuilding & Marine Engineering and Hyundai Heavy Industries rising 2-3 percent.
New Zealand shares rose sharply, with Fisher & Paykel Appliances extending gains for a third consecutive session after China's electronics maker Haier detailed its offer to buy the 80 percent stake that it doesn't already own in the company for $1.20 a share, valuing the New Zealand company at about $869 million.
Shares of the whiteware manufacturer soared over 12 percent, while the benchmark NZX-50 index rose 1.2 percent. Rural services firm PGG Wrightson jumped 5.6 percent, retailers Warehouse Group and Michael Hill International rallied 2-4 percent and Fletcher Building, the nation's largest construction company, added 1.5 percent, while New Zealand Oil & Gas tumbled 5 percent on going ex-dividend.
Elsewhere, India's benchmark Sensex was up 0.6 percent, Indonesia's Jakarta Composite index rose half a percent, Singapore's Straits Times index was moving up half a percent and the Taiwan Weighted average added 1.1 percent, but Malaysia's KLSE Composite edged down marginally.
On Wall Street, stocks ended modestly higher overnight, as investors remained optimistic about the possibility of further monetary stimulus from the Federal Reserve. However, trading activity remained a little bit subdued ahead of the German Federal Constitutional Court's ruling on a request for a temporary injunction against Europe's permanent bailout fund.
The tech-heavy Nasdaq inched up only 0.5 points or less than a tenth of a percent and the S&P 500 added 0.3 percent, while the Dow rose half a percent to end the session at its best closing level in well over four years.
by RTT Staff Writer
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