By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) -- Japanese and Australian stocks rose
Tuesday after upbeat manufacturing reports from the U.S. and the
euro zone, while Hong Kong shares retreated on weakened activity at
Chinese factories.
Australia's S&P/ASX 200 rose 2.3%, extending gains after the
central bank held rates steady. Japan's Nikkei Stock Average
climbed 1%, and Singapore's Straits Times Index added 0.9%.
Their gains came as stocks on Wall Street ended higher after the
Institute for Supply Management reported an increase in its
manufacturing index, and the euro-zone's Purchasing Managers' Index
(PMI) for June climbed to a 16-month high.
"These are good signs for the world's two largest-consuming
regions. The fact Europe looks like normalizing and could emerge
from what is a record-long recession for the region will be a
massive benefit the global economy," said IG Markets strategist
Evan Lucas.
The U.S. and euro-zone manufacturing reports follow the Bank of
Japan's quarterly tankan survey Monday, showing a sharp improvement
in confidence at large Japanese businesses, although two separate
PMI surveys on China maintained their downtrend.
Meanwhile, Hong Kong's Hang Seng Index fell 0.3%, and South
Korea's Kospi slipped 0.2%, while the Shanghai Composite gave up
0.4%.
Banks and property developers declined in Hong Kong after the
China PMI releases, with China Construction Bank Corp. (CICHY)
losing 3.3%, and China Overseas Land & Investment Ltd. (CAOVY)
sliding 2%.
PMI data from Taiwan and South Korea also indicated a further
deterioration in their respective manufacturing sectors on
Monday.
"The June PMIs for emerging Asia suggest the region's
manufacturing sectors continue to struggle. ... We think fragile
global demand will make life difficult for Asia's manufacturers, at
least until the end of the year," said Kyrstal Tan, Asia economist
at Capital Economics.
An overnight increase in prices of gold, copper and crude-oil
aided shares of commodity producers around the region.
Gold miner Newcrest Mining Ltd. (NCMGY) jumped 5.9%, and energy
producer Santos Ltd. (SSLTY) gained 4.9% in Sydney, while Sumitomo
Metal Mining Co. (5713.TO) soared 3.8% in Tokyo.
In Hong Kong, shares of PetroChina Co. (PTR) leapt 5.6%, getting
an extra lift from news that China's economic planning agency has
raised the government-set wholesale prices of natural gas by about
15%.
Australian financial rose after Monday's losses, extending gains
after the Reserve Bank of Australia left rates unchanged Tuesday as
most economists expected.
Commonwealth Bank of Australia (CBAUY) and Australia & New
Zealand Banking Group (ANZBY) gained 1.5% each, though still
underperforming the broader market. But insurers did even better,
with Insurance Australia Group Ltd. (IAUGF) up 4.2% and QBE
Insurance Group Ltd. (QBIEY) rising 3.1%.
Several Japanese exporters were also spurred as the U.S. dollar
(USDJPY) stuck close to the 100-yen level amid expectations the
greenback may soon return above the psychologically important
level.
"Based on the direction of monetary policy, we feel that [the
dollar's rate against the yen] should revisit its highs," said BK
Asset Management managing director Kathy Lien.
"If U.S. [Treasury] yields continue to rise, Japanese companies
will start to reduce their hedges as the cost to maintain these
positions rise, which is another factor that could drive [the
dollar] back to its 2013 high" against the yen, she said.
Shares of Hitachi Ltd. (HTHIY) rose 4.9%, Canon Inc. (CAJ) added
3.1%, and Subaru-maker Fuji Heavy Industries Ltd. (FUJHY) rose
1.6%.
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