The markets across the Asia-Pacific region ended higher on Thursday following the release of better-than-expected U.S., New Zealand and Australian jobs reports and an assurance from U.S. Treasury Secretary Timothy Geithner that none of the country's biggest banks are insolvent.
Reports suggested that the government stress tests of the nation's leading financial firms have determined that JP Morgan (JPM), Goldman Sachs (GS), American Express (AXP), and Bank of New York Mellon (BK) will not need additional capital, allaying investor worries about the financial sector.
While the official results are not due to be released until after the close of trading on Thursday, the leaks generated some optimism in the markets across the region. Tokyo's Nikkei 225 led the regional indexes with a 4.5% jump, as trading resumed after a three-day holiday.
Credit Suisse Group AG said in a report on Wednesday that forward-looking indicators in the U.S. and China showed manufacturing orders increasing at a faster rate than production for the first time in 14 months.
Crude oil price advanced 4.6% to settle at a five-month closing high of $56.34 per barrel in New York trading on Wednesday after a surprise drop in U.S. gasoline inventories and a slowdown in private sector job losses in April lent support to prices.
While U.S. crude inventories rose by a lesser-than-expected 600,000 barrels to a fresh 19-year high of 375.3 million barrels last week, gasoline stocks declined unexpectedly, falling 200,000 barrels to 212.4 million barrels, the Energy Information Administration said on Wednesday. In Asian trading, crude oil was last hovering higher at around $57.40 a barrel, boosted by leaked bank stress test results and hopes of rising oil demand in summer season.
Overnight, the U.S. markets had a pretty good session despite some profit taking during the course of the day. Market sentiment was fairly upbeat thanks to better-than-expected economic data. Investors also reacted positively to reports suggesting that several of the financial companies examined by the government don't need additional capital. The Dow Jones Industrial Average rose 1.21% and the S&P 500 index gained 1.74%, but the Nasdaq egged up a modest 0.28%, underperforming the Dow and the S&P 500 by a wide margin.
Private sector employment showed a much smaller-than-expected decrease in April, according to the latest ADP employment report. The report showed that non-farm private employment fell by 491,000 jobs in April following a revised decrease of 708,000 jobs in March. Economists had expected a decrease of 645,000 jobs compared to the loss of 742,000 jobs originally reported for the previous month. While the data points to continued weakness in the labor market, it presents another sign that the economy is stabilizing and generated some optimism about the Labor Department's monthly employment report due to be released on Friday.
The Japanese market rose to a 6-month high on broad-based buying amid hopes that the global economy may be bottoming. The market was closed Monday through Wednesday for the Golden Week national holidays.
The Nikkei 225 index rose 408 points or 4.55% to 9,386, its highest closing level since Nov. 5. Meanwhile, the Topix index of all First Section issues on the Tokyo Stock Exchange closed at 886, up 39 points or 4.61%.
Financials surged across the board as they catched up with gains among their peers in the global markets. Mitsubishi UFJ Financial Group soared 15.76%, Sumitomo Mitsui Financial Group climbed 10.73% Mizuho Financial Group jumped 13.04% and Resona Holdings rallied 8.40%. Sumitomo Mitsui is buying Nikko Cordial Securities Inc brokerage and the underwriting divisions of Nikko Citigroup
Insurer Mitsui Sumitomo Insurance jumped 7.34%, Sompo Japan Insurance surged up 15.65% and T&D Holdings rallied 12.50%. Sompo said last Friday that it is considering offering non-dilutive subordinated bonds worth Y100 billion to bolster its balance sheet.
Shipping stock Mitsui O.S.K. Lines and Nippon Yusen jumped more than 8% each after the Baltic Dry Index closed higher by 8.9% overnight. Toyota Motor advanced 3.59% ahead of the release of its earnings report on Friday. Honda jumped 6.83%, Suzuki soared 11.23%, Nissan rose 2.55% and Mazda Motor rallied 5.20%.
In the technology sector, Canon jumped 8.31%, Advantest advanced 3.77%, Tokyo Electron moved up 1.08%, Kyocera rallied 4.95%, Fujitsu gained 4.23% and Sony Corp surged up 6.78%.
The Australian market closed sharply higher, boosted by gains in the overseas markets and positive employment data for April. Official data showed that the jobless rate had unexpectedly dropped to 5.4 per cent in April from 5.7 per cent in March. Economists had expected a jobless rate of 5.9 per cent.
The benchmark S&P/ASX200 index closed at 3,939, up 72 points or 1.85% and the broader All Ordinaries index rose 72 points or 1.9% to 3,912.
Miners closed stronger. BHP Billiton rallied 5.28%, its rival Rio Tinto advanced 2.79% and Iluka Resources closed up 0.86%. Fortescue Metals Group gained 3.3% and OZ Minerals surged up 7.33%.
BlueScope Steel climbed 22.33% after coming out of a trading halt. Sims Metal soared 8.58% despite reporting a $94 million net loss after taxes for the nine months ended March. Property trust GPT Group was in a trading halt as it plans to raise $1.69 billion equity to strengthen its balance sheet
News Corp. climbed 9.56% after the company maintained its guidance for fiscal 2009 operating earnings. Fairfax Media surged up 6.54%, Consolidated Media soared 9.69% and Seven Network closed up 0.68%.
Banking stocks mostly closed higher. National Australia Bank rose 1.14%, Commonwealth Bank closed up 0.17%, Westpac Banking added 1.75% and investment bank Macquarie Group advanced 2.33%, but ANZ slipped 0.06%. While insurer AMP tumbled 4.19% and Henderson Group edged down 0.27%, QBE Insurance rose 3.27% and AXA Asia Pacific rallied 5.08%.
In the oil and gas sector, Woodside Petroleum advanced 3.71%, Oil Search rallied 4.94% and Santos jumped 5.20% after crude oil price closed above $56 a barrel for the first time since November in New York trading overnight.
Gold miner Newcrest Mining fell 1.44%, but Lihir Gold added 1.69%. Among retailers, Woolworths slipped 0.08%, Wesfarmers, which owns Coles, rallied 4.90%, Harvey Norman Holding gained 2.19% and David Jones surged up nearly 11%.
Nickel producer Western Areas NL surged up 9.28% on announcing an off-take agreement with BHP Billiton. Baker Goodman Fielder fell 3.85% after Macquarie Group cut its rating on the stock to underperform. Aviation stock Virgin Blue Holding gained 1.69% and Qantas Airways rose 0.96%.
In economic news, a report from the Reserve Bank of Australia showed that the official reserve assets increased to A$51.35 billion in April from A$47.32 billion in March.
During the month, the foreign exchange reserves grew to A$46.54 billion from A$42.09 billion in the preceding month. At the same time, the gold reserves decreased to A$3.12 billion from A$ 3.42 billion in March, and the SDRs declined to A$232 million from A$244 million. The reserve position in the IMF was down to A$870 million in April from A$914 million in the preceding month.
The South Korean market closed a choppy session modestly higher. The benchmark KOSPI rose 8 points or 0.55% to 1,401, the highest closing since Oct. 2. While foreign funds picked up a net KRW226.6 billion worth of stocks, domestic financial institutions offloaded a net KRW436.4 billion.
Korea Exchange Bank surged up 11.18% on reports that the state-run Korea Development Bank was interested in acquiring the lender. Woori Finance rose 0.45% after reporting better-than-estimated first-quarter results. KB Financial, the holding firm of Kookmin Bank also moved up 2.09%.
Bulk carrier STX Pan Ocean and Kora Line Corp rallied more than 4% each after the Baltic Dry Index, the gauge of commodity-shipping cost, jumped 8.9% to 2,065 on Wednesday.
Technology stock LG Electronics fell 3.74%, LG Display LCD shed 1.27% and Hynix Semiconductor tumbled 4.75% due to the strengthening of the won against the U.S. dollar.
Steel maker POSCO advanced 3.98% on higher commodity prices, Ssangyong Motor climbed further by around 12% on rescue hopes and market heavyweight Samsung Electronics closed up 0.18%. Hyundai Motor tumbled 3.48% and Kia Motors fell 2.20%
Among shipbuilders, Daewoo Shipbuilding jumped 4.44%, but Hyundai Heavy Industries declined 1.20% and Samsung Heavy Industries moved down 1.11%.
Among other notable stocks, telecom stock SK Telecom rose 1.11%, oil stock S-Oil advanced 3.67%, aviation stock Korean Air Line gained 0.84% and Asiana Air Line edged up 0.22%, but KT fell 1.50% and oil stock SK moved down 0.81%.
The New Zealand market closed at a 6-month high, helped by late buying after the country's employment report showed fewer than expected job losses at companies. The benchmark NZX-50 closed at 2,855, up 24 points or 0.83%.
Bellwether Telecom closed down 0.35% after it agreed to filter some of its cellphone transmission in resolution of a dispute with Vodafone Group Plc. Contact Energy rose 0.83%, Fletcher Building gained 0.44% and Fisher & Paykel Appliances rallied 4.92%. Retailer Hallenstein Glasson moved up 2.22%, Pumpkin Patch advanced 1.55%, but Warehouse Group closed down 0.79%.
PGG Wrightson surged up 8.78% amid signs of a lift in prices of farm commodities. New Zealand Oil & Gas rose 1.39% after crude oil price closed at a 5-month closing high on Wednesday. Energy stock Vector ended up 0.46%, Sky City rallied 5.02% and resin maker Nuplex soared 8.11%, while Tourism Holdings closed flat after falling nearly 2% on Wednesday.
AMP NZ Office Trust plunged 8.43% after it announced a rights issue to raise $201 million from unit holders. Lion Nathan was in a trading halt as it continues talks with Kirin about a takeover.
Among other notable stocks, Tower advanced 4.76%, Pike River Coal climbed 7.06% and Air New Zealand ended up 1.94%, but Steel and Tube fell 1.69% and Rakon tumbled 4.40%.
On the economic front, the unemployment rate in New Zealand came in at an annualized 5.0 percent for the first quarter of 2009, Statistics New Zealand said on Thursday, touching a six-year high. The rate came in better than analyst expectations of 5.3 percent following the 4.7 percent rate in the final three months of 2008.The employment change was down 1.1 percent compared to the previous quarter, slightly worse than the 1 percent decline that had been forecast after the 0.9 percent increase in Q4.
The Indian market closed a choppy session higher amid favorable global cues. Trading was extremely volatile due to profit taking by domestic financial institutions. The BSE Sensex closed at 12,117, up 164 points or 1.37% over the previous close. The broader market outperformed the benchmarks. While the broad-based BSE 500 index closed up 1.78%, the small-cap and the mid-cap indexes closed higher by around 2.7% each.
Among the other markets in the region, China's Shanghai Composite index ended up 0.19%, Hong Kong's Hang Seng index rose 2.28%, Singapore's STI Straits Times index gained 2.87% and Taiwan's TWII Weighed index edged up 0.09%.
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