VietNam Business: Asian stocks

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Wednesday, January 5, 2011

Asia stocks hit 2-year high, dollar rises vs yen

Photo: Reuters

HONG KONG - Asian stocks shot to a two-year high on Monday, boosted by interest in emerging markets, while the dollar edged up after last week's selloff though speculation the Federal Reserve will add to money supply was still rife.

European stocks were between half a percent and 1 percent lower in early dealings, with the benchmark FTSEEurofirst 300 down 0.75 percent, extending a five-day retreat.

The dollar remained close to an eight-month low against a basket of major currencies, with expectations increasing the Fed will resort to a second round of bond purchases before the year is over to support the US economy.

By contrast, Chinese manufacturing activity has held up surprisingly well, keeping investors confident about the region's prospects and pushing up the MSCI index of Asian stocks outside Japan to the highest level since June 2008.

"Continued foreign buying, amid the US dollar's recent weakness and an increasing preference for emerging market stocks, has lifted the market to a new high," said Lee Jin-woo, a market analyst at Mirae Asset Securities in Seoul.

Strong foreign portfolio flows into the region have lifted Asian currencies, putting pressure on regional central banks to step up intervention to limit the inflow of speculative "hot money" and to support their export-oriented economies.

Financial leaders gather for the International Monetary Fund meeting this week and the concept of countries keeping their currencies weak for export-gain is likely to be a hot topic.

Japan's Nikkei closed 0.3 percent lower in choppy trade ahead of a Bank of Japan policy decision on Tuesday.

The dollar surged against the yen in a short-covering rally as the Japanese currency retreated against other currencies as investors unwound some long yen positions ahead of the BOJ meeting.

Central banks on tap this week

Former BOJ Deputy Governor Toshiro Muto said on Friday the central bank may ease policy as inaction would run the risk of spurring further yen gains, given the prospects for easing by the US Federal Reserve.

Traders are not expecting the BOJ to make a substantial change to policy but may hold off on big bets on the yen ahead of central bank meetings in Britain and the euro zone on Thursday, as well as the September US payrolls report on Friday.

"Nervous trade will likely continue this week, even after tomorrow's event, as US jobs data is also set to be released later in the week," said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.

The MSCI index of Asia Pacific shares outside Japan, which has risen for six consecutive weeks, was up 1.1 percent with a 2.3 percent gain in the energy sector leading the pack on the back of firm crude prices.

Hong Kong's Hang Seng index led regional exchanges, rising 1.4 percent, with oil-related stocks such as CNOOC Ltd providing the most support to the market.

Petrochina Co., the world's second-most valuable oil and gas producer, was up 3.7 percent in Hong Kong.

US crude futures were steady near a two-month high at $81 a barrel, having risen $5 in the past week on the dollar's weakness and as a strong revival in Chinese manufacturing by a mid-year lull appeared to soothe fears of a new downturn in the global economy.

The dollar looked vulnerable against a basket of currencies, hovering near Friday's eight-month low, but had edged up 0.2 percent against a basket of currencies in Asian trade.

"It's still a dollar-negative situation but short-term probably the market has priced a lot in," said Masafumi Yamamoto, chief FX strategist Japan at Barclays Capital.

Asian currencies, such as the South Korean won and Taiwanese dollar, climbed against the dollar, despite an estimated $18.8 billion spent by regional central banks last week to keep their currencies weak, according to estimates from traders compiled by IFR Markets.

The potential of significant amount of cheap money being added to the financial system via the Federal Reserve continued to support gold prices.

The precious metal was up 0.2 percent to $1,317.55 an ounce, after hitting a fresh record of $1,320.80 on Friday on sustained dollar weakness.

Wednesday, December 29, 2010

Asian stocks advance as China data boosts hopes

Photo: Reuters

SINGAPORE - Asian stocks rose on Friday as stronger-than expected economic indicators from China and the United States boosted confidence in the global economic recovery.

European shares also rose, after slipping in the previous four sessions amid debt concerns in the euro zone. The FTSEurofirst 300 rose 0.2 percent, Britain's FTSE 100 gained 0.6 percent, Germany's DAX rose 0.4 percent and France's CAC 40 was up 0.3 percent.

Chinese manufacturing gathered momentum last month, handily beating market forecasts and providing further evidence that the economy is pulling smoothly out of a second-quarter slowdown.

The MSCI index of Asia Pacific stocks outside Japan was up 0.34 percent compared with a rise of 0.24 before the release of China's Purchasing Managers Index. The index gained more than 17 percent in the last quarter.

"This looks like the real deal. It's not just inventory correction. We think that end demand is picking up in China and the economy has stabilized after the summer lull," said Frederick Neuman, co-head Asian economics, HSBC in Hong Kong.

Japan's Nikkei average closed up 0.37 percent on Friday, helped by short-covering after sharp falls the previous day and after US economic data provided a degree of optimism.

The index gained 6.2 percent in September, it is more than 2 percent off the peak hit after Japanese authorities conducted currency market intervention on September 15 to weaken the yen.

"Japanese stocks are recouping some ground as investors appear to be correcting extreme pessimism triggered yesterday by the yen's advance and worries about European finance problems," said Koichi Nosaka, a market analyst at Securities Japan Inc.

Data watch

US data on Thursday showed new jobless benefits fell last week and regional manufacturing grew faster than expected.

Later on Friday, the Institute for Supply Management is scheduled to release US manufacturing data.

US Treasury prices slipped as investors turned to stocks and the dollar held steady after dropping to an eight-month low against a basket of currencies the previous day.

The euro paused below a five-month high on the dollar hit the previous day, helped by data showing euro zone banks are relying less on funds from the European Central Bank.

The dollar dipped 0.1 percent to 83.47 yen, but stayed above the previous day's low at 83.16 yen and last month's 15-year trough below 83.00 that had prompted Japanese authorities to intervene for the first time in six years.

The Australian dollar jumped on optimism that the strong data from China augured well for the country's resource exports.

Oil rose above $80 on Friday, staying at a seven-week high, as the renewed momentum in China's manufacturing sector pointed to stronger demand. Copper also advanced on hopes of greater Chinese demand.

But gold, widely seen as a safe haven, also ticked up, hovering within sight of a lifetime high, although traders said the improving data from China and the US could curb gains.

Traders said spot gold, which stood at $1,310.40 an ounce after hitting a record around $1,315 the previous day, remained volatile as investors watched for signs of a firmer US recovery.

"I guess speculation will still be rife as to the state of the US economy. The need or not for a QE2 from the Fed," said Darren Heathcote, head of trading at Investec Australia in Sydney.

Tuesday, October 5, 2010

Asia stocks rise as US data soothes fears

Photo: Reuters

TOKYO - Asian stocks rose to a two-week high, with Japan's Nikkei briefly rising more than 2 percent, as strong US manufacturing data further soothed worries about the global economy.

The dollar and the yen began the day on the defensive, while commodities gained, helping make materials shares some of the strongest performers across the region as gold steadied after a two-month top hit on Wednesday.

The Institute for Supply Management said its index of US factory activity rose to 56.3 in August from 55.5 in July, much higher than forecast by economists.

Coming on the heels of strong Chinese manufacturing data and stronger-than-expected growth in Australia, the numbers eased investor fears about the pace of global economic recovery and helped Wall Street to its best day in eight weeks.

But gains in Asian stocks, which were also boosted by gains in tech shares, appeared capped by wariness about whether the global economy is truly on the path to recovery, as well as concern about closely watched US nonfarm payrolls data on Friday.

"It's too early to say worries about a double-dip recession in the economy have been wiped away just because China's PMI, Australia's GDP and US data weren't bad," said Masahiko Sato, an executive director at Nomura Securities' equity marketing department.

"But stocks may become more resilient to poor economic indicators going forward and gain further if money that had shifted to bonds on extreme concern over the economy comes back to equities, early signs of which have likely appeared in US, Germany and U.K. bonds after yesterday's data."

The MSCI index of Asia Pacific stocks outside Japan rose 0.8 percent to its highest level since mid-August.

Japan's benchmark Nikkei rose more than 2 percent at one point, moving further away from a 16-month low hit on Wednesday, helped by what some market players said was buying by domestic institutional investors at lows and buying of futures by foreign players.

But the Nikkei pared gains to 1.2 percent by midday. It lost 7.5 percent in August and is down roughly 14 percent on the year.

Seoul shares rose 0.3 percent, boosted by tech stocks, with market players saying foreign investors, cheered by the rise on Wall Street, could turn strong buyers.

Australian stocks rose 0.8 percent to a three-week high, with miners such as Rio Tinto gaining after copper prices rose to a four-month high.

Steady dollar

The dollar index, a gauge of the greenback's performance against a basket of six major currencies, was steady on the day at 82.528 after falling 0.9 percent on Wednesday, marking its biggest one-day fall in six weeks.

The dollar edged down 0.2 percent to 84.27 yen but still stayed above a 15-year low of 83.58 yen hit last week.

Through the ISM data boosted higher-yielding currencies such as the Australian dollar, investors have now turned hesitant about taking fresh positions ahead of the European Central Bank's policy meeting later in the day and Friday's closely watched monthly US job report, a trader said.

Spot gold edged up to $1,246.70 an ounce, after hitting $1,254.65 on Wednesday, its highest since June 28.

Oil held onto most of the previous session's gain of 2.8 percent after the strong manufacturing data in top consumers the US and China raised hopes record oil inventories will draw down.

US crude for October delivery was steady at $73.91 a barrel after a jump of nearly $2 on Wednesday.

Friday, October 1, 2010

Asia stocks rise on China

Photo: Reuters

SINGAPORE - Asian stocks rose on Wednesday as investors cheered a manufacturing rebound in China and rosier-than-expected Australian growth, which halted the yen's advance towards a 15-year peak against the dollar.

Asian stocks shrugged off a flat lead from Wall Street, reflecting belief that Asia's economic recovery could hold up relatively well compared to the United States, which faces the possibility of a double-dip recession.

Leading European stocks opened 0.4 percent higher, while S&P 500 futures were flat.

China's manufacturing economy regained some momentum in August, while Australia's economy grew at the fastest pace in three years last quarter as households spent far more than expected while exports enjoyed an Asian-driven boom.

"The market is still concerned about the global recovery momentum, but based on fundamentals, some funds will flock from developed countries to Asia," said Daniel Chan, chief economist and wealth management strategist BWC Capital Markets in Hong Kong.

The MSCI index of Asia Pacific stocks outside Japan rose 1.5 percent, led by commodity-related shares due to optimism about Chinese.

But the MSCI Asia index is still down about 2.5 percent so far this year, compared to a 6.6 drop on the MSCI world-wide index, underscoring Asia's economic resilience.

Analysts expect increased volatility in Asian stock and bond markets as markets brace for a slowdown in the world economy.

Japan's Nikkei average rose 1.2 percent after briefly hitting a 16-month low, getting a boost from the Chinese data while technology shares crawled higher in reaction to a sharp fall the day before.

Australian stocks jumped just over 2 percent, the sharpest daily rise since early July, as investors applauded Australia's outperformance against sluggish global economies.

Australia and New Zealand Banking Group led in a rally in local bank shares, powering 2.4 percent higher.

South Korean stocks gained 1.3 percent, propelled by auto and retail counters including Kia Motors and Lotte Shopping, but key technology shares continued to fall amid persisting concern over global economic recovery.

"The market is being helped by gains in defensive, domestic consumption issues as investors seek safer bets," said Lee Sun-yeb, a market analyst at Shinhan Investment Securities.

U.S. Treasury yields rebounded slightly after the benchmark 10-year yield recorded its largest monthly drop in August since late 2008, when markets were reeling from the Lehman Brothers collapse.

Yen off 15-year high

The yen fell as upbeat Chinese and Australian data improved investors' appetite for risk. It extended losses after Japanese ruling party powerbroker Ichiro Ozawa, challenging Prime Minister Naoto Kan in a party leadership vote, said he would implement steps including intervention if the yen rose sharply.

The Australian dollar jumped 1 percent to 75.85 yen and the dollar edged up 0.3 percent to 84.40 yen.

Japanese government bonds fell as investors braced for a debt sale, and the yield curve resumed steepening as superlongs sagged on the underlying prospect of potential political change watering down the government's stance on fiscal austerity.

The 10-year yield was up 5 basis points at 1.010 percent while the 20-year yield climbed 7.5 basis points to 1.735 percent, heading back towards a seven-week high of 1.835 percent hit on Monday.

Gold prices hit a fresh one-month high at $1,250.55 an ounce, while crude gained 36 cents to $72.28 a barrel after tumbling 3.7 percent the previous day on signs U.S. stockpiles rose further last week and prospects of bad weather to suppress demand at the end of the driving season.

Asia stocks rise on China