RTTNews - The markets across the Asia-Pacific region, except South Korea, ended in positive territory on Wednesday, tracking positive cues from Wall Street, where better-than-expected consumer confidence reading lifted the markets on hopes of economic recovery, spurred by consumer spending. Positive trade data from Japan and an announcement of an economic stimulus package in Hong Kong as well as higher commodity prices lifted sentiment across the markets. However, the KOSPI Index, ended in negative territory on increasing concerns over security in the region after North Korea declared that the armistice that ended the Korea War in 1953 is no longer valid.
U.S. consumer confidence showed a substantial improvement in the month of May, according to a report released by the Conference Board on Tuesday, with the consumer confidence index rising to its highest level in eight months. The report showed that the consumer confidence index rose to 54.9 in May from an upwardly revised 40.8 in April. Economists had expected the index to edge up to 42.6 from the 39.2 originally reported for the previous month. Earlier, a report released by Standard & Poor's revealed that home prices continued to show record declines in the first quarter of 2009, suggesting that the recent signs of revival in the housing market had not yet resulted in a turnaround in prices.
Traders largely shrugged off the data, however, citing the lagging nature of the numbers and choosing to focus on the encouraging consumer confidence data. The Dow closed up 196.17 points or 2.4% at 8,473, the Nasdaq rose 58.42 points or 3.5% to 1,750 and the S&P 500 closed up 23.33 points or 2.6% at 910.
The Nikkei 225 Average opened sharply higher at 9,427 compared to its previous close at 9,311, led by positive cues from Wall Street, and continued to surge ahead to a high of 9,491 in morning session. Positive economic data on the home front, which signaled that exports may see a modest recovery from the recent slump, as well as the weakening of the local currency against the US greenback also lifted the sentiment. Due to a lack of buying support at higher levels, the index gave back some of its gains and ended the session with a gain of 128 points, or 1.37%, at 9,439.
On the economic front, the Ministry of Finance revealed that the country registered a merchandise trade surplus of 69.0 billion yen in April, compared to expectations of a trade deficit of 69.5 billion yen, marking the third straight month of surplus. Exports plummeted 39.1% year-over-year, lower than expected annual decline of 41.9%, while imports fell 35.8% on an annual basis. On a seasonally adjusted basis, exports were up 1.9% in April, the report revealed.
The minutes released by Bank of Japan for its recent meeting on April 30 revealed that Board members felt that there was no need for additional policy steps to combat the economic slowdown. The number of downgrades among Japanese firms may continue to increase, the board said, also cautioning not to expect a sharp rebound in commodities. The board also decided to wait and watch with interest for the results of the U.S. stress tests on financial institutions. The U.S. economy also needs additional time to bottom out, the board said.
Nikon Corp advanced 3.48% after the company announced plans to trim its work force by 1,000 employees in its effort to reduce costs. The company expects to report a loss in 2009 after reporting profit in 2008, impacted by the downturn in the global economy. The company also said it intends to return back to profit in 2010.
Seven & I Holdings lost 1.47% after the company revealed that it would shut down the Sapporo outlet of group company Seibu Department Stores Ltd. by the year-end and sell the property after its closure. The Department store reported a 27% drop in operating profit year-over-year, hurt by a sharp decline in consumer spending
Among banking stocks, Mitsubishi UFJ advanced 2.13%. Mizuho Financial gained 1.31%, Resona Holdings edged up 0.07%, and Sumitomo Mitsui added 0.80%.
Notwithstanding a bounce in oil prices, oil stocks ended mixed. Inpex lost 1.67% and Nippon Oil shed 1.70%, but Showa Shell advanced 2.12%.
In Sydney, the All Ordinaries Index, which closed Tuesday's trading session at 3,782, opened higher at 3,791 and continued to surge ahead to 3,828 in early trading on positive cues from Wall Street and higher commodity prices. However, traders preferred to sell stocks in order to participate in the A$2.85 billion capital-raising programme of ANZ Bank, dragging down the index from the day's high. Amid alternate bouts of selective buying and selling, the market ended with a gain of 13.70 points, or 0.36%, at 3,795. The benchmark S&P/ASX 200 Index followed a similar trend and ended up at 3,801 with a gain of 12.7 points or 0.3%.
Markets largely shrugged off a slew of economic data released during the day. The Australian Bureau of Statistics stated that the value of construction work done declined a seasonally adjusted 3.7% sequentially in the March quarter, after a revised 2.3% rise in the December quarter. Survey results released by Westpac Bank and the Melbourne Institute revealed that economic activity remained anemic during March. The group's leading economic index for March increased by just 0.3% compared to February, and was 5.1% lower than its level of one year ago. A report released by the Australian Department of Employment and Workforce Relations revealed that the number of job vacancies for skilled workers in Australia declined in May by 7.0% from April. The index stands at 35.1, and represented a 62.6% decline in skilled vacancies compared to a year earlier. Decreases were recorded in 16 of the 18 occupational groups surveyed, the report revealed.
Resource stocks advanced, led by higher commodity prices in the international market. BHP Billiton advanced 1.05%, Orica gained 2.02% and Oz Minerals surged 6.67%. However, Rio Tinto declined 1.67% on concerns about its deal with China Aluminum Company.
Oil stocks also advanced after crude oil prices continued to move northward.
Woodside Petroleum added 0.28%, Santos gained 1.54% and Oil Search advanced 2.08%.
Stocks across the sectors witnessed selling as investors raised funds to participate in the capital-raising programme of ANZ Banking. The bank is planning to raise $2.85 billion through share placement. The bank intends to utilize the proceeds from the issue for funding the potential acquisition of the assets of Royal Bank of Scotland and for other corporate purposes.
Among the financials, Commonwealth Bank of Australia lost 0.90%, Macquarie Group declined 1.02%, and Westpac Banking shed 1.78%. National Australia Bank, however, bucked the trend and ended higher by 0.46%.
Mixed trend was witnessed among gold stocks. While Lihir Gold declined 0.94%, New crest Mining added 0.75% and Sino Gold advanced 0.64%.
Among retailers, David Jones advanced 1.98% and Harvey Norman gained 2.80%. Wesfarmers remained unchanged from previous close, while Woolworths declined 1.28%.
In Hong Kong, the Hang Seng Index surged more than 5% after the government announced a fresh stimulus package equivalent to approximately US$2.2 billion, involving tax cuts, waiver of fees and spending.
All, but one, of the 42 components of the Hang Seng Index posted impressive gains. The market, which closed at 16,992 on Tuesday, opened strongly higher at 17,396, led by Wall Street gains and continued to move northward on the stimulus package announcement. The index ended the day with a gain of 5.26% or 897 points at 17,885.
Property stocks advanced on expectations that the stimulus package would spur economic activity. Henderson Land soared 7.71% and SHK Property gained 5.13%. Except New World Development, which edged down 0.28%, all other stocks in the sector posted gains.
Resource stocks advanced on higher commodity and oil prices. PetroChina advanced 5.83% and CNOOC, the largest offshore oil company in China, gained 4.93%.
Li & Fung, which supplies clothes and toys to major retailers in the US such as Wal-Mart and Target Corp., is the major gainer following upbeat consumer confidence reading in the U.S. The stock soared 10.82%.
Among financial stocks, HSBC Holdings advanced 5.77%, Hang Seng Bank gained 4.85% and Bank of China surged 9.49%. All financial and insurance stocks ended in positive territory.
Among china-related stocks, China Mercantile Holdings advanced 8.33%, China Resources rose 8.35% and China Shenhua gained 5.18%.
In South Korea, the benchmark KOSPI Index ended in negative terrain, as security concerns overshadowed the positive sentiment across the region led by better than expected consumer confidence reading in the U.S.
After opening higher at 1,395 compared to its previous close of 1,372, the Kospi witnessed volatile trading in morning session. However, increasing security concerns in the region after North Korea declared that the armistice that ended the Korea war in 1953 would no longer be valid pushed the index decisively below the unchanged line in late trading. The index finally ended in negative territory with a loss of 10.02 points, or 0.73%, at 1,362.
Heavyweight Samsung Electronics edged down 0.53% on heavy selling pressure. Among technology stocks, Hynix Semiconductor declined more than 4% after a U.S. court gave an unfavorable verdict on its patent infringement case against a chipmaker based in the U.S.
Shipbuilders dragged the market down on bleak investor confidence. Daewoo Shipbuilding lost 5.75% and Samsung Heavy Industries slipped 2.08%. However, Hyundai Heavy Industries ended in positive territory, with a gain of 1.16% after reporting a 15% rise in sales during April on annual basis.
In India, the stock market ended higher, mirroring the positive sentiment across the Asian markets and gains on Wall Street. The broader market is witnessing an across-the-board buying interest, with the mid-cap and small-cap stocks leading the way. Hectic activity on the options front ahead of the close of May series tomorrow also lifted the indices.
The BSE Sensex closed at 14,110, up 520.41 points, or 3.84%, while the Nifty gained 159.35 points, or 3.87% to close at 4,276.05.
Among the other major markets in the region, China's Shanghai Composite Index gained 44.35 points or1.71% to close at 2,633, Indonesia's Jakarta Composite Index added 1.90% or 35.26 points to close at 1,893, Singapore's Strait Times Index ended higher at 2,306, with a gain of 67.29 points or 3.01% and Taiwan's Weighted Index rose 207.33 points or 3.10% to 6,890.
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