Asian Markets Trading Firm On Recovery Hopes

on August 12 2009 11:53 PM

RTTNews - With the U.S. Federal Reserve sounding quite optimistic about an economic revival and pledging to keep interest rates low, Wall Street ended up sharply overnight. Taking cues, Asian markets are trading firm on Thursday with most of them recording impressive gains with investors picking up stocks from technology, automobile and financial sectors with renewed vigor. Some of the markets in the region are witnessing frenzied buying activity on the back of recent encouraging economic reports and fairly buoyant April - June quarterly earnings.

Bank stocks are calling the shots in the Australian market today. There are some gains for select energy and materials stocks as well. Industrials, technology and healthcare stocks are also trading firm.

The Australian benchmark index S&P/ASX 200 is up by 60.3 points or 1.4% at 4,403. The broader All Ordinaries index is up with a gain of 60.6 points or 1.4% at 4,407.

In the banking space, Commonwealth Bank of Australia is gaining nearly 3.5% while ANZ Bank, National Australia Bank and Westpac Banking Corporation are trading higher by 2 - 3%. Diversified financials major Macquarie Group is up by over 2%.

Among mining majors, Rio Tinto is up by 1.3%, while BHP Billiton is exhibiting some weakness. Bluescope Steel, Fortescue Metals, Incitec Pivot and Orica are trading higher, while Newcrest Mining and Lihir Gold are trading weak.

Energy major Santos has announced it has discovered gas in the Browse Basin off Western Australia. The Burnside-1ST1 exploration well in permit WA-281-P has struck a 65 meter gross gas column in the primary target, which is the Brewster Sandstone. Santos says various tests have indicated there is gas throughout the fairly low permeability sandstone interval and that there is potential for the gas column to extend below the base of the sand. Santos is currently trading nearly 2% up.

Other energy stocks Woodside Petroleum and Oil Search are also trading firm this morning.

Coca-Cola Amatil expects to post high single digit profit and earnings growth for the second half of 2009 after delivering a 10.4 per cent lift in profit for the first half. The company posted net profit after tax of A$189.8 million in the six months to June 30, 2009. The stock is edging up by 1.2% this morning.

The Australian dollar opened higher today with upbeat comments from the US central bank on an economic recovery giving a lift to high-yielding assets such as equities and the local currency. In early trading this morning, the Aussie was quoting at US$0.8330/35, up 1.78% from Wednesday's close of US$0.8185/89. The Australian dollar, which was trading at 0.8150 around noon, is currently trading at 0.8351 to the U.S. dollar.

In Tokyo, stocks surged higher on strong cues from Wall Street and a weaker yen and the benchmark index Nikkei, which moved on to 10,525, ended the morning session at 10,511, up 76.14 points or 0.73% over its previous close.

Bank, automobile, steel, non-ferrous metals and machinery stocks were mostly trading higher. Chemicals and pharmaceuticals stocks also had a good outing this morning.

According to a report from the Ministry of Finance, overseas investors were net buyers of Japanese stocks for the fourth straight week last week, purchasing a net 292.9 billion yen worth of shares. However, the net figure was smaller than the previous week's 424.7 billion yen, as the recent stock rally likely prompted overseas players to lock in profits.

Astellas Pharma Inc. said today the U.S. District Court rejected its appeal against the Food and Drug Administration's decision earlier this week on immune system drugs. The Tokyo-based pharmaceutical maker had petitioned the FDA to instigate more rigid procedures for prescribing generic versions of its Prograf drug, an oral immunosuppressant for organ transplant recipients. Astellas said the court in Washington D.C. also rejected its request for a preliminary injunction keeping the FDA from approving generic versions of Prograf while the court reviewed the case.
Astellas said in a statement it is still reviewing future options following the decision. The pharma stock was up nearly a percent at the end of the morning session.

Nippon Sharyo Ltd. shares opened bid-only this morning before briefly soaring 39 yen to 638 yen, the stock's highest level since July 1997. The jump in the train maker's stock came on the back of reports that the country will use Japan's bullet train technology to build a high-speed railway connecting northern city of Hanoi and the southern commercial hub of Ho Chi Minh City. Other railway stocks, including Kawasaki Heavy Industries, Kinki Sharyo, Toyo Electric and Nippon Signal were also trading firm.

In the currency market, the U.S. dollar traded at the lower 96-yen level early Thursday in Tokyo, up slightly from its levels overnight in New York. In early trading this morning, the dollar fetched 96.13-18 yen against Thursday's close of 96.00-10 yen in New York and 95.25-26 yen in Tokyo. The yen is currently trading at 95.88 to the U.S. dollar.

The Korean market is trading firm, riding on the strength of bank, technology and automobile stocks. The benchmark Korean index KOSPI is up by 13.5 points or 0.85% at 1,579.

Among automobile stocks, Kia Motor and Hyundai Motor are up by over 3.5% and 2%, respectively, while Ssangyong Motor is up by 15% again.

In the technology space, LG Display LCD is gaining about 3.5%. LG Electronics is up nearly 2% and heavyweight Samsung Electronics is up with a modest gain. Hynix Semiconductor, however, is down in negative territory with a sharp loss.

Bank stocks, Korea Exchange Bank and Woori Finance are trading with notable gains. Shinhan Financial is up by over 3%, while KB Financial is trading modestly higher.

Oil and energy stocks are exhibiting weakness. Telecom and steel stocks are trading mixed. Among airliners, Korea Airlines is up by around 2%, while Asiana Airlines is trading with a modest gain of 0.8%. Shipbuilders are exhibiting a mixed trend.

Among other markets in the Asia-Pacific region, Hong Kong, Indonesia, New Zealand, Singapore and Taiwan are up sharply with their key indices moving up by 1.3% - 2%. Shanghai is trading modestly higher. Stock markets across the region had finished markedly lower on Wednesday.

On Wall Street, shrugging off a report that showed U.S. trade deficit widened in June, traders stayed bullish on Wednesday after the Federal Open Market Committee announced that it was maintaining the target range for its benchmark federal funds rate at zero to 0.25% and repeated its belief that low rates will persist for what it calls an extended period. The central bank added that economic activity is leveling out.

The central bank also said it will gradually slow the pace of treasury purchases and expects that the full amount of US$300 billion will be purchased by the end of October.

Going into the meeting, the Fed was universally expected to leave rates unchanged, but there was some speculation that the central bank could announce the end of its program to buy treasury bonds, a move it had undertaken to further stimulate the economy.

The Dow jumped by 120.16 points or 1.3% to 9,362, the Nasdaq moved up by 28.99 points or 1.5% to 1,999 and the S&P 500 surged 11.46 points or 1.2% to 1,006.

Major European markets closed considerably higher, with the French CAC 40 index and the German DAX index rising by 1.5% and 1.2% respectively, while the U.K.'s FTSE 100 index posted a gain of 1%.

Oil prices closed higher, lifted by a Wall Street rally as the market shrugged off a larger-than-expected jump in US crude inventories that fueled worries about weak demand. Light sweet crude for September delivery, settled at US$70.16 a barrel, up 71 cents from Tuesday's close.

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