The markets across the Asia-Pacific region closed stronger for a second day in a row after an upbeat report from the U.S. central bank and a sharp rise in Japanese industrial output hinted that the global economic slowdown might be bottoming out. Data released Wednesday also showed that business inventories in U.S. fell by a record amount in the first three months of the year.
In Asian trading on Thursday, crude oil price rebounded to above $51 a barrel, boosted by firm equity markets and a sense of optimism that the recession in the U.S. may be abating. A U.S. Energy Information Administration report showing a surprise 4.7-million-barrel decline in nationwide gasoline inventories, also offered some support.
In the U.S., stocks turned in a strong performance overnight, as investors shrugged off some weak GDP data and mulled over remarks from the Federal Reserve. While the Dow Jones Industrial Average gained 2.11%, the Nasdaq Composite rose 2.28% to a 6-month high and the S&P 500 index advanced 2.16%, setting a three-month closing high.
The advance first-quarter GDP report indicated that the U.S. economy fell 6.1% between January and March, better than the 6.3% drop in the previous quarter but considerably worse than the 4.7% decline economists had anticipated. However, a substantial 2.8% decline in inventories helped a rebound in consumer spending, which climbed a better-than-expected 2.2% in the first quarter after falling 4.3% in the fourth quarter and 3.8% in the third quarter. In another significant development, the FOMC kept the federal funds rate unchanged at 0.00% to 0.25%, as expected. Its quantitative easing targets were also unchanged.
Earnings will determine the U.S. market's direction on Thursday with nearly 150 companies scheduled to announce their latest results. Initial jobless claims data and personal spending data for March would also influence stocks on Wall Street.
The Japanese market rebounded sharply after remaining closed on Wednesday for a national holiday. The Nikkei 225 index closed at 8,828, up 334 points or 3.94% and the broader Topix index of all First Section issues on the Tokyo Stock Exchange rose 26 points or 26 points or 838.
Investors picked up stocks across all 33 industrial sectors on the TSE amid stronger-than-expected Japanese industrial output data and an encouraging economic assessment by the U.S. Federal Reserve.
Banking stocks rebounded on short covering. Mitsubishi UFJ Financial Group jumped nearly 6%, Sumitomo Mitsui Financial Group soared 6.92%, Mizuho Financial Group advanced 3% and Resona Holdings closed up 0.38%.
High- technology stocks closed stronger encouraged by strong industrial performance. Advantest rallied 4.32%, Canon jumped 6.12%, Tokyo Electron surged up 8.74%, Kyocera jumped 7.48%, Fujitsu advanced 2.94% and Sony moved up 3.05%.
Auto stocks also showed significant gains. Honda Motor climbed 9.42%, Suzuki rose 2.28%, Toyota rallied 5.19%, Nissan Motor soared 9.21% and Mazda moved up nearly 4%. Industrial robots manufacturer Fanuc surged up nearly 7% after reporting better-than-forecast earnings for the last fiscal year.
Toshiba rose 3.38% after it has proposed to spend 10 billion yen ($103 million) for a 52 percent stake in nuclear fuel producer Nuclear Fuels Industries. Electronics maker Pioneer plunged 8.19% on worries about a dilution in per-share value after the company proposed to raise 40 billion yen to shore up its financial standing.
In economic news, the Bank of Japan retained its key interest rate as expected and downgraded its economic outlook. The Policy Board of the central bank unanimously voted to hold the uncollateralized overnight call rate at 0.1%. The previous change in interest rates was a 20 basis point cut implemented in December 2008.
Separately, Japan's housing starts declined 20.7% on a yearly basis in March, slower than the 24.9% decrease seen in February, the Ministry of Land, Infrastructure and Transport reported Thursday. Economists were expecting housing starts to drop 22.5%.
The Australian market closed sharply higher, helped by strong global cues and a rally in U.S. stock futures. The benchmark S&P/ASX200 index closed at 3,780, up 85 points or 2.31% and the broader All Ordinaries index rose 83 points or 2.26% to 3,745.
Among big miners, Rio Tinto rallied 5.02% but Iluka Resources fell 1.49%. BHP Billiton advanced 3.10% after announcing an in- principle agreement with the Suriname Aluminum Company (Suralco), a subsidiary of US giant Alcoa.
Bauxite miner and aluminum smelter Alumina was in a trading halt pending a capital raising involving retail and institutional investors. Gold Miner Lihir Gold closed up 0.33% after reporting its record first quarter gold output of 318000 troy ounces.
Oil and gas producer Woodside Petroleum rose 2.65% and Oil Search closed up 0.79%, but Santos slipped 0.24%. Origin Energy moved up 0.93% despite reporting an eight percent fall in its output for the third quarter.
Media stocks rose across the board. Fairfax jumped 6.76%, News Corp rallied 5.37%, and Seven Network gained 2.78%. Shopping centre owner and operator Westfield Group rose 1.23% after reconfirming its earnings and distribution guidance for the full year.
Banking stocks bounced back after a sell-off on Wednesday. National Australia Bank rose 0.44%, ANZ advanced 3.25%, Commonwealth Bank gained 1.74%, Westpac Banking added 1.86% and investment bank Macquarie Group rallied 5.08%.
Among insurers, AMP rose 2.17%, QBE Insurance rallied 3.86%, Henderson Group moved up 1.69% and AXA Asia Pacific advanced 1.83%.
The South Korean market surged on fund buying after industrial output data for March surprised marketmen on the upside, showing a rise of 4.8 percent compared to the previous month. The benchmark KOSPI rose 31 points or 2.31% to the year's high of 1,369. Volume was significant at 794.67 million shares worth 8.42 trillion won (US$6.51 billion) and advancers outnumbered decliners by 660 to 192.
Among automakers, Kia Motor rallied 5.14%, Ssangyong Motor advanced 4% and Hyundai Motor moved up 4.26%. Shipbuilders closed mixed. Samsung Heavy Industries gained 3.05% and Hyundai Heavy added 2.68%, but Daewoo Shipbuilding closed unchanged.
Banking stocks closed sharply higher, helped by heavy buying from domestic funds. Korea Exchange Bank rose 4.14%, Woori Finance climbed 10.22% and KB Financial, the holding firm of Kookmin Bank soared 6.14%.
Telecom stock SK Telecom fell 1.87% after reporting an unexpected 17% decline in its first-quarter net income. On the other hand, KT closed up 1.08%. Airlines stocks, which had suffered sharp losses in recent sessions, closed firm. Asiana Air Line rallied 5.46% and Korean Air Line advanced 3.44%.
Among other notable stocks, oil stock SK gained 3.48%, energy stock KEPCO moved up 2.19%, steel maker POSCO rose 2.06%, market heavyweight Samsung Electronics rose 1.02% and LG Electronics added 1.92%, but technology stocks Hynix Semiconductor fell 1.37% and LG Display LCD closed down 0.63%.
In economic news, South Korean statistical office reported that the country's industrial output grew 4.8% month-over-month in March. The latest increase came after a revised 7.1% rise in the previous month. Year-over -year, industrial output declined 10.6% in March, worse than a 10% fall in February. Economists were looking for a 13% slump for March.
The New Zealand market rose to more than a two-month high amid strong global cues and a 50 basis points rate cut by the Reserve Bank of New Zealand. The central bank said that it is committed to keeping rates low until late 2010. The benchmark NZX-50 closed at 2,741, up 41 points or 1.51%, the highest closing since Feb 13.
Market heavyweight Telecom rallied 3.68%, Kiwi Income Property rose 2.20% and Property for Industry added 0.91%, as investors chased high-yielding stocks. Building materials maker Fletcher Building jumped 5.02% after it added NZ$20 million to its capital-raising plan.
Australia and New Zealand Bank rose 3.80% after plunging nearly 8% on Wednesday. NZX closed up 3.62% after it has entered into a conditional agreement to buy the energy and related assets of M-co, the Marketplace Company, for $13.1 million.
Discount retailer Warehouse Group rose 2.57%, Hallenstein Glasson closed up 0.79%, children's clothing retailer Pumpkin Patch rallied 4.35% and jeweler Michael Hill jumped 5.77%. Mainfreight rallied 4.12% and Freightways advanced 3.57% after posting a 4% rise in its nine-month profit.
Fisher & Paykel Appliances advanced 2.22%, Tower rallied 4.62%, Infratil rose 1.29%, Steel and Tube gained 2.88%, Nuplex surged up 9.09% and Vector closed up 0.93%.
Air New Zealand fell 1.87% on worries about swine flu but Auckland Airport moved up 0.61%. Among major decliners, electricity generator Contact Energy declined 1.38%, energy stock TrustPower slipped 0.14%, Tourism Holdings fell 2%, Sky City moved down 1.08% and Fisher & Paykel Healthcare drifted down 0.33%.
The Indian market was closed for trading due to elections in Mumbai. Friday will be a holiday for Labor Day.
Among the other markets in the region, China's Shanghai Composite index closed up 0.38%, Hong Kong's Hang Seng index rallied 3.77%, Singapore's STI Straits Times index advanced 3.82% and Taiwan's TWII Weighed index surged up 6.74%.
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