RTTNews - The markets across the Asia-pacific region ended higher on Wednesday, led by higher metal and oil prices which rose on expectations of higher demand. Wall Street's resilience even amid uncertainty concerning a recovery and stronger than expected economic data from Australia as well as China lifted market sentiment. Concerns about valuation of stocks and the negative sentiment generated by weak Japanese machinery orders were more than offset by optimism about global recovery, helping the Asian stocks advance.
In the U.S., the Treasury Department announced that 10 of the largest U.S. financial institutions that borrowed money from the Treasury under the TARP funding are planning to repay their loans. JP Morgan Chase (JPM), U.S. Bancorp (USB) and Bank of New York Mellon (BK) were among the banks that will repay a total of $68 billion. An announcement from the Treasury Secretary Timothy Geithner that he plans to begin reforming the U.S. regulatory system soon also augured well , which saw
some life in the stock market in late afternoon Tuesday after witnessing choppy trading in the morning session.
Earlier traders were presented with mixed economic data. A report from the Commerce Department revealed that U.S. wholesale inventories fell by a little more than expected in the month of April. The report showed that wholesale inventories fell 1.4% in April following a revised 1.8% decrease in March. Economists had expected inventories to decrease by about 1.1% compared to the 1.6% drop originally reported for the previous month. Additionally, the Commerce Department said that
wholesale sales edged down 0.4% in April after falling by a more significant 2.4% in March. Wholesale sales were down 19.5% compared to the same month a year ago.
The tech-heavy Nasdaq closed up by 17.73 points or 1% at 1,860 and the S&P 500 rose 3.29 points or 0.4% to 942, while the Dow slipped by 1.43 points or 0.02% to 8,763.
Crude oil prices continued its northward march and ended higher with a gain of $1.06 at $71.07 a barrel in Asian trading. Light sweet crude for July delivery rose sharply to a seven-month high on higher demand and ended with a gain of $1.92 at $70.01 a barrel on the New York Mercantile Exchange on Tuesday.
Japan's Nikkei 225 Average opened sharply higher at 9,833 compared to its previous close of 9,787, and continued to move higher, led by resource stocks on higher commodity prices in the international market. Weak machinery orders data did not have any major impact on stock movement. The weakening of the local currency against the U.S as well as positive trading across other Asian markets also supported the market. The index finally closed at the day's high of 9,991, representing a
gain of 205 points, or 2.09%. The broader Topix Index of all first section issues also advanced to 937, ending with a gain of 18.77 points, or 2%.
On the economic front, the Cabinet Office revealed that core machinery orders were down 5.4% month-over-month in April, falling to to a 22-year low of 688.8 billion yen. Economists were anticipating a 0.4% increase in machinery orders during April following the 1.3% decline in March and the 0.6% gain in February.
In a separate report, the Bank of Japan revealed that the price of domestic corporate goods in the country declined 0.4% in May compared to the previous month. Economists were anticipating a 0.3% drop for the month following a revised 0.6% decline in April and the 0.2% contraction in March.
Resource stocks led the gains on higher metal and oil prices. The second largest zinc smelting company in the country, Dowa Holdings soared more than 8.5% on higher metal prices.
Trading companies also advanced on higher commodity prices. Mitsubishi Corp. advanced 6.3%, while Marubeni Corp. gained 5.29%.
Oil stocks surged up after crude oil prices breezed past the $71 a barrel mark in Asian trading on expectations of higher demand. Among the stocks, Inpex gained 3.48%, Nippon Oil advanced 2.36% and Showa Shell rose 1.57%.
Shipping stocks resumed their rally following a brief pause in the past few sessions after brokerage Credit Suisse Group AG raised the outlook for marine transport companies from neutral to outperform on expectations that earnings will bottom out this year. Among the shipping companies, Kawasaki Kisen gained 6.40%, Mitsui O.S.K. Lines advanced 5.50% and Nippon Yusen rose 4.35%.
Kawasaki Heavy Industries gained the most after reporting that it has developed a new nickel-hydrogen battery, which can be recharged in less than 10 seconds and can be used in buses. The stock advanced 15.74%.
Financial stocks advanced on optimism about economic recovery. Mitsubishi UFJ gained 2.56%, Mizuho Financial Group surged
6.10%, Resona Holdings advanced 2.31% and Sumitomo Mitsubishi soared 5.65%.
Australia's All Ordinaries Index opened unchanged from its previous close at 3,933 and moved sharply higher, led by resource stocks on higher commodity prices in the international market. Positive economic data on consumer confidence for May and a rise in housing finance commitments lifted market sentiment. The index ended up at 4,016, representing a sharp gain of 82.70 points or 1.20%. The benchmark S&P/ASX 200 Index followed a similar trend and ended higher at 4,024, a gain of 89.50points or 2.27%.
On the economic front, the latest survey by the Westpac and Melbourne Institute revealed that consumer sentiment in the country rose 12.7% to 100.1 points in June from 88.8 points in May, after the economy registered positive growth in the March Quarter. This was also the second largest increase in the index since the survey began in 1974. A reading above 100 indicates optimists outnumber pessimists.
In a separate report, the Australian Bureau of Statistics revealed that the total value of housing finance commitments, excluding alterations, rose a seasonally adjusted 3.6% month-on-month in April to A$21.5 billion. The report further noted that of the total housing finance commitments, investment housing commitments rose 8.9%, while owner occupied housing commitments increased 1.9% in April.
Resource stocks led the gains on higher copper prices in the international market. BHP Billiton, the world's largest mining company, advanced 3.29%, and its rival Rio Tinto gained 3.43% . Metals soared more than 15% as small mining companies are bullish about their prospects following the fall-out of the Rio Tinto - Chinalco deal and the signing of a new joint venture deal between Rio Tinto and BHP Billiton for combining the operations of the mines in Western Australia.
In the oil space, Woodside Petroleum advanced 1.45%, Santos surged 3.72% and Oil Search soared more than 4.5% on higher oil prices.
Among financial stocks, ANZ Bank gained 2.50%, Commonwealth Bank advanced 2.62%, and Westpac Banking increased 2.27%. National Australia Bank added 1.94%..
Gold stocks also advanced on higher bullion prices in the market. Lihir Gold advanced 1.33%, Newcrest Mining edged up 0.47% and Sino Gold Mining advanced 1.87%.
In Hong Kong, the Hang Seng Index opened sharply higher at 18,340 compared to its previous close of 18,058, and continued to surge ahead on recovery hopes. Better than expected economic data from mainland China, higher commodity prices and positive sentiment across the region lifted sentiment in the market pushing the index up 4%. The index ended with a sharp gain of 727 points or 4.01%, at 18,786.
All the components of the index, except two, gained during the day. Banks, resource stocks and china-related shares posted gains.
In property space, Henderson Land gained 2.63%, SHK Property advanced 1.75%, Wharf Holdings rose 2.72%, and Hang Lung Property increased 5.50%.
Among financials, Bank of China soared 8.29% on huge volumes. All stocks in the sector ended in positive territory on increasing hopes of economic growth and a recovery in mainland China.
Among resource stocks, PetroChina advanced 4.09% and CNOOC, the largest offshore oil company in China, gained 3.21%. Aluminum Corp. of China, or CHALCO, surged 8.76%.
In South Korea, the benchmark KOSPI Index ended sharply higher, led by institutional investments in select blue-chip stocks. Institutional investors, who resorted to heavy selling in the past two sessions, returned back and indulged in huge purchases on recovery hopes. After opening strongly higher at 1,380 compared to its previous close at 1,372, the Kospi continued to move higher before ending with a gain of 3.14% or 43.04 points at 1,415.
Market heavy weight Samsung Electronics gained 3.89%. Leading automaker Hyundai Motor Co. soared 6.32%. Among financials, KB Financial Group surged up 6.41%.
In India, the stock market ended sharply higher, mirroring the positive sentiment prevailing across the region. Optimism about continuation of economic reforms at a faster pace and pre-budget announcements from the new Government continue to power the indices to higher levels.
The BSE Sensex gained 339.81 points or 2.25% to close at 15,467, and the broader Nifty Index advanced 2.25% or 104.30 points to close at 4,655.
Among the other major markets in the region, China's Shanghai Composite Index ended higher by 28.36 points or 1.02% at 2,816, Strait Times Index in Singapore gained 41.35 points or 1.76% to close at 2,391, Indonesia's Jakarta Composite Index added 15.52 points, or 0.74% to close at 2,109, and Taiwan Weighted Index advanced 0.75% or 47.88 points to close at 6,462.
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