Asian stocks rose broadly for the second day in a row, even as Chinese stocks tumbled after a late-session selloff on concerns about hefty valuations for small-cap growth stocks in an environment of slowing economic growth. Investors have exercised calm despite Greece defaulting on its latest repayment to the International Monetary Fund that was due by the end of Tuesday.
The Greek debt crisis ratcheted up uncertainty in the financial markets, but investors seem to believe that the European Union and the European Central Bank have the tools in place to contain any potential contagion from a default. All eyes are now on the upcoming July 5 referendum, which could determine the fate of Greece's membership in the 19-nation currency bloc.
Chinese stocks plunged once again, almost erasing Tuesday's rally, after data showed fresh evidence of sluggish growth. The benchmark Shanghai Composite index closed down 223.52 points or 5.23 percent at 4,053.70 after succumbing to a bout of late selling. The Hong Kong market was closed for the Special Administrative Region Establishment Day.
China's official PMI reading for June showed that the pace of expansion in the country's manufacturing sector held steady in June with a score of 50.2, slightly below estimates. However, the services PMI reading for June ticked up to 53.8 from 53.2 in the previous month. Separately, the final reading of the HSBC China Manufacturing PMI came in at 49.4 in June, down from last month's preliminary reading of 49.6, but up from the 49.2 reading in May.
China must accelerate reform of its state-dominated financial sector to get growth on a sustainable track and modernize its economy away from manufacturing toward consumption and services, the World Bank has warned in its latest review of the country's economy.
Japanese shares posted modest gains for the second day running after the Tankan survey of more than 10,000 companies showed improving confidence among big manufacturers. Investors also took the news of Greece's default on an IMF loan in their stride, keeping the yen under pressure from the dollar. The benchmark Nikkei average rose 93.59 points or 0.46 percent to 20,329.32 while the broader Topix index of all first-section issues closed 0.37 percent higher at 1,636.41.
Nippon Electric Glass, Obayashi Corp and J Front Retailing climbed 4-5 percent, while Mitsui Mining & Smelting, Asahi Group Holdings, Hitachi Construction Machinery, Sumitomo Heavy Industries, Komatsu and Japan Tobacco dropped 2-3 percent. Sony Corp edged up 0.3 percent after losing over 8 percent yesterday on equity dilution worries. Suzuki Motor tumbled 3 percent after naming the eldest son of chief executive Osamu Suzuki its new president.
In economic news, Japan's manufacturing sector barely expanded in June, the Nikkei/Markit/ final Japan Manufacturing Purchasing Managers Index showed with a score of 50.1, up from last month's preliminary reading of 49.9. The Bank of Japan's Tankan survey showed that business conditions strengthened during the second quarter. The headline index for big manufacturers' sentiment rose to 15, beating forecasts for 12, which would have been unchanged from the previous quarter.
Australian shares soared, with sentiment aided by takeover talks and soothing comments from RBA. Speaking in London, Reserve Bank Governor Glenn Stevens said that Australia's exposure to the Greek crisis was "miniscule directly" and there's unlikely to be material issues unless there was a major ruction in global markets. The benchmark S&P/ASX 200 index rose 56 points or 1 percent to finish at 5,515.7.
Shares of ports and rail operator Asciano soared 17 percent to a five-year high after the company confirmed that it has received a confidential, non-binding and conditional proposal from Canadian company Brookfield Infrastructure Group. Tassal Group climbed 8 percent after the company finalized a deal to buy the De Costi Seafoods Business.
The big four banks closed up between half a percent and 1.1 percent. Energy stocks Woodside, Oil Search and Santos climbed 1-3 percent after crude prices ended a five-session losing streak on Tuesday. Woodside Petroleum said today that it would press forward into the feed phase for its Browse floating LNG project.
Miners struggled, with BHP Billiton and Rio Tinto losing over 1 percent each after iron prices dropped below $60 a ton for the first time in five weeks. Gold Miner Newcrest fell 2.2 percent after gold prices fell Tuesday.
In economic releases, approvals for the construction of new homes rose 2.4 percent sequentially in May, while activity across Australia's manufacturing sector contracted sharply in June, separate reports showed.
Seoul shares rallied, reflecting ebbing worries about the Greek debacle on the broader global economy. The benchmark Kospi average gained 23.69 points or 1.14 percent to close at 2,097.89 in heavy trading. Market heavyweight Samsung Electronics and its affiliate Cheil Industries gained about 2 percent each after a Seoul court said the proposed takeover of Samsung C&T by Cheil Industries is legal and fair.
On the economic front, South Korea's manufacturing activity contracted for a fourth consecutive month in June, a private survey showed today, stirring new concerns over economic growth. The Nikkei Purchasing Managers' Index came in with a score of 46.1, down from 47.8 in May and representing the lowest reading in nearly three years.
Separately, a government report showed that the country posted a record trade surplus of $10.25 billion in June. While exports slipped 1.8 percent from a year earlier, imports slumped 13.6 percent, contracting for a ninth straight month.
New Zealand shares rose, led by utilities after Meridian Energy and Rio Tinto-controlled Aluminium Smelters extended their electricity agreement for another month. Shares of Meridian Energy and Mighty River Power climbed about 3 percent each, while Genesis Energy rallied 2 percent and Contact Energy rose 1.2 percent. Kathmandu Holdings dropped 1.1 percent on profit taking after rallying 26 percent on Tuesday. The benchmark NZX-50 index gained 67.39 points or 1.18 percent to close at 5,794.35.
Elsewhere, Indonesian shares were little changed and Singapore's Straits Times index was up about 0.2 percent, while the benchmark indexes in India, Malaysia and Taiwan were up between 0.6 percent and 1.3 percent.
Fitch Ratings upgraded the sovereign rating outlook of Malaysia to 'stable' from 'negative' and affirmed its credit ratings, citing improving fiscal finances.
U.S. stocks rebounded overnight as investors sought bargains following the previous session's steep sell-off. On the economic front, U.S. consumer confidence increased solidly in June, while home prices rose in April at a slower pace than forecast and factory activity in Chicago area contracted for the fourth time in June, separate reports showed. The Dow edged up 0.1 percent, the tech-heavy Nasdaq gained 0.6 percent and the S&P 500 added 0.3 percent.
For comments and feedback: editorial@rttnews.com