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Asian markets advance on hopes of recovery in banking sector
Wednesday, the major markets across Asia-Pacific region advanced on hopes that the banking sector across the world will recover earlier than expected after the Citibank CEO Vikram Pandit said on Tuesday that the bank made profit in the first two months of 2009, and is poised to report better results for the first quarter. Fed Chairman Ben Bernanke's assertion that large banks would not be allowed to fail also lifted the sentiment.
In the Asian session Wednesday, crude was up modestly in electronic trading. Oil closed Tuesday's session down $1.36 at $45.71 a barrel on the New York Mercantile Exchange, after hitting an intra-day low of $45.33 and a high of $48.32 after U.S. Energy Information Administration or EIA, in its short-term outlook, lowered forecast for global energy demand for 2009 by 430,000 barrels to 84.27 million barrels per day.
Banking stocks led the gains across the markets. Mining stocks also advanced after the commodity prices rose in the London Metal Exchange. While copper prices rose 3%, nickel and zinc prices advanced 3.3% and 2.7% respectively. The positive sentiment in the market lifted almost all the stocks, which were in an oversold state following huge sell-offs in the recent past. However, the strength of the rally may not sustain long as a recovery and bottom is nowhere in sight.
Mixed economic data from China also raised fresh concerns. While Fixed Asset Investment rose sharply, aided partially by the stimulus plans, export from the country declined sharply by more than 25% during February following an 18% drop in January, raising doubts whether the growth story of the Chinese economy will fizzle out or could not be sustainable. The Chinese Shanghai composite index discounted the weak economic data and closed in negative, bucking the uptrend in the rest of the major markets in the region.
The markets in India were shut for a public holiday. In Japan, the benchmark Nikkei 225 Index surged up 321 points or 4.6%, to close at 7,376 in Tokyo, while the broader Topix index added 19 points, or 2.7%, to 722.
On the economic front, the Bank of Japan said on Wednesday that Japan's domestic corporate goods price index was down 0.4% in February compared to the previous month, posting an index score of 105.0. That was better than analyst expectations that had called for a 0.6% fall on month after the 1.0% decline in January. On an annual basis, the CGPI eased 1.1% slightly better than forecasts that had predicted a decline of 1.2% after the 0.2% fall in the previous month.
Meanwhile, the Cabinet Office said that core machinery orders in Japan were down 3.2% in January compared to the previous month, marking the fourth consecutive month of decline. That came in higher than analyst expectations for a 4.8% monthly decline following the 1.7% drop in December.
Banking stocks led the rally in the market. Mitsubishi UFJ advanced 5.57%, Sumitomo Mitsui gained 4.83% and Mizuho Financial rose 0.57%.
Resona said it will retire about 160 billion yen in preferred stock owned by the government ahead of the April 1 deadline for converting the holdings into common stock. Also, the company's market capitalization surpassed that of Mizuho Financial on Tuesday for the first time. Following the news, the stock slid 4.75%.
Toshiba shares surged up 9.50% after a business daily reported that the company will likely secure an operating profit of about 100 billion yen for the year ending March 2010, rebounding from the 280 billion yen operating loss expected this fiscal year.
Among exporters, Canon gained 6.56%, Sharp rose 5.33% and Sony advanced 4.53%. Meanwhile, automaker Honda surged 6.25% andToyota added 2.11%.
In the oil sector, Inpex and Showa Shell advanced about 4% each while Nippon Oil gained 4.30%. Trading house Mitsubishi Corp. surged up 2.96%, Sumitomo Corp gained 2.24% and Itochu advanced 0.72%.
Seiko Epson is up 6% on news that it plans to consolidate three production bases of LCD panel subsidiary Epson Imaging Devices into one by September and stop production at a chip making plant as early as 2011 as part of restructuring.
In Australia, the benchmark S&P/ASX200 Index gained 60 points, or 1.88%, to close at 3244, while the broader All Ordinaries Index advanced 56 points or 1.78% to close at 3199. The major averages opened higher and rose further in early trading before moving sideways for the rest of the session.
On the economic front, the Westpac/Melbourne Institute survey of consumer sentiment index for March showed that consumer sentiment in Australia declined slightly in March by 0.2% to 85.6 points. Readings below 100 indicate pessimists outnumbering optimists. Consumers' feelings about the economy over the next five years, however, jumped 15.2%.
Banks and mining stocks led the rally in the market. Commonwealth Bank of Australia gained 2.99% and ANZ Banking Group advanced 3.22%. Westpac rose 2.55% and investment bank Macquarie Group closed higher by 4.43%. National Australia Bank managed to close in the green, with a modest 0.12% gain after showing weakness earlier in the day.
Mining stocks advanced after a measure of six metals traded in the London Metals Exchange rose on Tuesday. While Copper gained 3%, zinc and nickel advanced 3.3% and 2.7% respectively. BHP Billiton advanced more than 4% while rival Rio Tinto gained about 3%.
Retail stocks also posted gains. David Jones moved up 4.59%. Woolworths gained 1.43% and Wesfarmers advanced 0.87%.
Mixed sentiment was witnessed among energy stocks, with Oil Search advancing, while Santos and Woodside Petroleum retreated slightly from their previous closes. Oil Search gained 3.24%, whereas Santos and Woodside shed 2.75% and 0.27%, respectively.
Gold miners also closed on a mixed note after gold closed lower on Tuesday. Lihir gold shed more than 6% while Sino Gold and New crest mining gained 4.12% and 0.52% respectively.
In Hong Kong, the benchmark Hang Seng Index gained 2% or 237 points to close at 11,931. Financial stocks led the gains. However, profit taking at higher levels and weaker economic data from mainland China dampened sentiment and limited the gains.
HSBC Holdings, which surged past HK$42 in early trading, ended the day with a gain of 2.25%, while Hang Seng Bank advanced 5.75%. Most stocks, which rose in early trading, gave back most of their gains post-release of economic data in mainland China.
In Seoul, the bench-mark KOSPI index advanced 3.23% or 35 points to close at 1,128. Banks, commodities and exporters led the gains. The sharp appreciation in the local currency against the U.S greenback and foreign buying spree also lifted the market sentiment.
Shipbuilding stocks advanced, with Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding posting gains in excess of 3% each.
Financial stocks also gained, led by KB Financial Group, the holding firm of Kookmin Bank, up more than 7%, while Woori Finance and Shinhan Group advanced 3.4% and 2% respectively.
In the automobile sector, Kia Motors gained more than 6% and Ssangyang Motor and Hyundai motor were up more than 2%, each.
Oil Stocks SK Holdings and S Oil also advanced, with gains of 2.5% and 1.7%, respectively.
Among the other markets, China's Shanghai Index slipped about 1% or 19 points to 2139, while Malaysia's KLSE Composite Index ended down 5 points to 855. Singapore's Strait Times Index advanced 1.33% to 1505, while Taiwan's Weighed Index gained about 1.9% or 89 points to 4760. |