Monday, the markets across the Asia-Pacific region closed sharply higher, encouraged by higher metal prices, reports showing better-than-expected consumer confidence and manufacturing in the U.S. and easing fears about swine flu. The Japanese market was closed for a National Holiday.
Investors anxiously look forward to the U.S. Treasury department's results of the bank stress tests. This report will be released on Thursday, with aggregate numbers as well as recommendations for the top 19 U.S. banks.
In Asian trading, crude oil hovered around $53 a barrel, as investors expressed caution amid weak physical demand for fuel. Oil prices rose more than $2 a barrel on Friday to hit a four-week high on support from improved macroeconomic news and further evidence of record levels of compliance by OPEC with its agreed output cuts. US crude futures jumped $2.08 to settle at $53.20 a barrel, after hitting $53.65, the highest since April 3.
On Friday, Wall Street ended with modest gains after a highly choppy ride amid low volumes. While higher natural gas and crude oil prices lifted energy stocks, banks were seen struggling on hearing that results of government's bank stress tests wouldn't be released until May 7.
In economic news, factory orders fell 0.9%, worse than the 0.6% decline that was expected, and February orders were revised lower to reflect an increase of 0.7%. The Institute for Supply Management released its report on manufacturing activity in the month of April, showing that activity continued to contract for the month but at a much slower than expected pace. Separately, the Reuters/University of Michigan's consumer sentiment index for the month of April was unexpectedly upwardly revised to a reading of 65.1 from the previously reported reading of 61.9.
With the earnings season starting to wind down, economic news could be in focus in the U.S. this week. Traders are likely to pay close attention to the Labor Department's monthly employment report due to be released on Friday. Reports on construction spending, pending home sales, labor productivity, and wholesale inventories are also likely to attract some attention.
The Australian market jumped to its best level in seven weeks, led by strong gains in financials and resources stocks. The benchmark S&P/ASX200 closed at 3,883, up 113 points or 3.01% and the broader All Ordinaries index rose 108 points or 2.89% to 3,846.
Banking stocks closed stronger. National Australia Bank rallied 4.53%, ANZ advanced 3.88%, Commonwealth Bank jumped 4.42% and Westpac Banking rose 2.90%. Investment bank Macquarie Group rose 1.61% after it has raised 540 million Australian dollars ($400 million) in new equity.
Insurer AMP advanced 4.49%, QBE advanced 3.37%, Henderson Group surged up nearly 8% and AXA Asia Pacific jumped 5.61%.
Big miners also ended firm after three-month copper and other base metals rose on the London Metal Exchange on Friday. BHP Billiton gained 2.48%, its rival Rio Tinto rallied nearly 5% and Iluka Resources jumped 4.62%. Alumina advanced 2.48% after the resumption of trading following a capital raising.
Gold miner Newcrest Mining added 1.50% and Lihir Gold rose 0.34% despite little change in the price of the precious metal.
Orica surged up 10.73% after the industrial explosives maker reaffirmed that 2009 full-year net profit would be higher than last year. The company also increased its dividend payout by 3 percent.
Energy stocks rose after crude oil price rose more than $2 a barrel to hit a four-week high over the weekend. Woodside Petroleum soared 5.39%, Oil Search advanced 3.31% and Santos jumped 4.91%. Oil and gas producer ROC Oil climbed 21.21% after the company said it was aware of rumors it may be a takeover target.
Brewer Lion Nathan slipped 0.17% on saying that it will finalize a takeover implementation agreement with Japan's Kirin Holdings next week.
Among retailers, Harvey Norman Holding soared 7.43% and David Jones climbed nearly 10%, but Woolworths slipped 0.23%. Among media stocks, while News Corp rose 2.86%, Seven Network fell 1.59%.
In economic news, Australia's inflation gauge was unchanged month-over-month in April, following a 0.1% decline in March, a report from the TD Securities and Melbourne Institute showed Monday.
The South Korean market closed sharply higher amid continuing buying by foreign funds and an expected recovery in corporate earnings in the second quarter. South Korean exports fell less than expected in April and export earnings per day rose for the third month in a row, data released by the government showed on Friday.
The benchmark KOSPI rose 2.09% or 29 points to 1,398, the highest since October 2. Volume was significant at 737.4 million shares worth 8.85 trillion won (US$6.93 billion) and advancers outnumbered decliners by 583 to 255.
Banking stocks rallied on signs on economic recovery and better earnings outlook. Korea Exchange Bank advanced 3.56%, Woori Finance soared 10.38% and KB Financial, the holding firm of Kookmin Bank surged up nearly 15% to 45,700 won, the highest since October 15, after reporting better-than-expected quarterly earnings.
Aviation stock Asiana Air Line rallied 4.93% and Korean Air Line rose 3.96% after the won extended its gains against the U.S. dollar. Shipbuilders also rose significantly on hopes about a revival in the industry. While Hyundai Heavy jumped 7.39%, Samsung Heavy Industries gained 3.29% and Daewoo Shipbuilding added 4.40%.
Among automakers, Kia Motors rose 0.89%, Ssangyong Motor closed up 0.64% and Hyundai Motor ended up 0.58%.
Among other notable stocks, technology stock Hynix Semiconductor advanced 3.82%, LG Electronics closed up 0.94%, LG Display LCD edged up 0.48%, steel maker POSCO rose 1.89%, oil stock SK gained 1.68%, S-Oil added 1.17% and energy stock KEPCO rallied 5.89%. Meanwhile, market heavyweight Samsung Electronics declined 1.69%, defensive telecom stock SK Telecom fell 1.63% and KT closed unchanged.
The New Zealand market closed sharply higher on low volumes as investors continued betting there's an economic recovery underway in the U.S. The benchmark NZX-50 index closed at 2,766, up 46 points or 1.70%. Turnover was worth $73.8 million and advancers outnumbered decliners by 52 to 22.
After dropping nearly 7% on Friday, market heavyweight Telecom bounced back and closed up 4.18%, as traders looked forward to its earnings announcement due on Friday. Among other blue chip stocks, Contact Energy Contact Energy rose 2.28% and building products firm Fletcher Building gained 2.37%
Air New Zealand fell 1.94% on renewed concerns about the swine flu outbreak, but Auckland Airport closed up 1.81%. Freightways closed up 0.68% on reports that its $50 million capital raising to strengthen its balance sheet will reduce the company's forecast net debt to operating earnings for the year ending June 30 from 3.1 times to 2.4 times
Among retailers, Pumpkin Patch moved down 0.82% and Hallenstein Glasson ended down 0.38%, but Warehouse Group rose 2.16% and jeweler Michael Hill rallied 3.64%.
Sky City slipped 0.37%, Fisher & Paykel Healthcare edged down 0.33% and Cavalier Corp declined 1.79%, but Steel and Tube gained 0.34%, Port of Tauranga added 1.48% and Fisher & Paykel Appliances jumped 6.25%. Meanwhile, resin-maker Nuplex, energy stock TrustPower and Vector closed unchanged.
On the economic front, the Rabobank Rural Confidence Survey for New Zealand revealed that sentiment among farmers worsened in the first quarter. According to the survey, about 33% of farmers expect the economy to worsen in the next 12 months compared to only 29% in the previous survey in November. Moreover, the number expecting the conditions to remain stable declined to 38% from 44% in the previous survey. However, the number of farmers who expect conditions to improve moved up slightly by one percent to 27%.
Separately, the New Zealand's Treasury said in a report that it expects the real GDP to fall around 1% in the March quarter. The Treasury noted that demand and output declined again in the first quarter leading to decreases in capacity utilization and the demand for labor.
The benchmark for the Chinese market, the Shanghai Composite index jumped to a nine-month closing high of 2,560, up 3.32% over the previous close, boosted by broad based buying on expectations of an early economic recovery after the CLSA Purchasing Managers' Index for April rose to a nine-month high. Brokerage CLSA said its China Purchasing Managers' Index (PMI) rose to 50.1 in April from 44.8 in March.
Hong Kong's Hang Seng index rose 860 points or 5.54% to 16,381, the highest level since mid-October 2008, encouraged by a recovery in China and better-than-expected macroeconomic news in the U.S. Turnover surged to a four-month high of HK$80.3 billion ($10.36 billion) compared to Thursday's HK$70.9 billion.
Meanwhile, the Indian market also surged, mirroring strong global cues amid extended buying support from foreign funds and domestic financial institutions. The BSE Sensex was last trading near the day's high of 12,158, up 755 points or 6.62% over the previous close.
Among the other markets in the region, Singapore's STI Straits Times index surged up 5.55% and Taiwan's TWII Weighed index soared 5.64%.
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