RTTNews - Asian markets are trading firm on Monday with a strong close on Wall Street and hopes of a swift economic revival on the back of some encouraging reports from U.S. and Japan lifting investor sentiment to a significant extent. With the U.S. unemployment rate declining for the first time since April 2008 and the Japanese core machinery orders showing a more than expected rise in June, the global economy looks appears to be inching closer to the recovery path. Though some of the markets in the region have come off their morning highs, the mood continues to remain fairly bullish today.
In the Australian market, financials, consumer staples, healthcare and telecommunications stocks are trading firm. Resource-related stocks are trading mixed. Technology and consumer discretionary stocks are mostly trading firm.
The Australian benchmark index S&P/ASX 200 index is currently up by 34.4 points or 0.8% at 4,334. It had earlier surged to 4,348. The broader All Ordinaries index is up with a gain of 36.5 points or 0.8% at 4,340.
Miner Rio Tinto fell in early trade after China accused the firm of spying on Chinese companies for six years. Despite a positive outlook on commodity prices, Rio Tinto tumbled sharply this mooring and is still trading in the red, down by around 1.5% from its previous close. The fall came after China's State Secrets Bureau was reported over the weekend to have detailed allegations against Australian man Stern Hu and three of his Rio Tinto colleagues.
Bendigo and Adelaide Bank has gone into a trading halt today, pending the release of an unspecified announcement. Bendigo and Adelaide Bank Ltd is reportedly seeking to raise A$300 million in fresh equity after posting a 57.7% plunge in 2008/09 net profit.
Crane Group Ltd's net profit declined 28% to A$43.6 million for the year to June 30, compared to A$60.8 million in the previous financial year.
Crane, a manufacturer of non-ferrous metal products, plastic pipeline systems and plumbing supplies, said difficult trading conditions were expected to continue and that it was unlikely that net profit before significant items in 2009/10 would exceed that of 2008/09. The stock is down by over 8% now.
In economic news, first time homebuyers were again at the forefront of demand for new home loans in June, taking advantage of both low mortgage rates and a more generous federal grant. The data released by the Australian Bureau of Statistics showed first home buyers made up 27.1% in June, just shy of a revised 28.5% record in May. Overall demand for mortgages rose by a seasonally adjusted 1.1% in June for owner-occupiers over the previous month to 65,151 loans, the report showed.
In the currency market, the Australian dollar opened weaker today with the first decline in the US unemployment rate since April 2008 lifting investor demand for the American currency. In early trading, the Aussie was quoting at US$0.8370/78, down 0.17% from Friday's close of US$0.8386/90. The Australian dollar is currently trading at 0.8388 to the U.S. dollar.
In Tokyo, besides Wall Street cues, impressive Japanese core machinery orders in the month of June contributed to the heady start for the market this morning.
Following a rousing start, the Nikkei, which opened past the 10,500 mark, rose to a new 10-month high at 10,585 on hectic buying across the board. The index, which was up 147.9 points or 1.42% at 10,560 at the end of the morning session, has eased a bit from that level on resumption of trade but is still very much up in positive territory.
At 10,544, the Nikkei is currently up 131.4 points or 1.26% over its previous close.
Steel stocks JFE Holdings, Pacific Metals, Nippon Steel, Sumitomo Metal and Kobe Steel are trading higher by 1% - 3%. Non-ferrous metals SUMCO, Sumitomo Metal Mining, Toyo Seikan Kaisha, Sumitomo Electric Industries, Mitsubishi Materials and Furukawa are trading firm.
Automobile stocks Toyota Motor, Honda Motor, Suzuki Mazda Motor and Isuzu Motors are up sharply with some of them gaining 2% to 3% over their previous closing prices.
In the banking space, Sumitomo Mitsui Financial, Bank of Yokohama, Resona Holdings, Shizuoka Bank and Mitsubishi UFJ Financial, Chuo Mitsui Trust Holdings and Shinsei Bank are trading notably higher this morning.
Mitsubishi Rayon is up nearly 3% on reports that Mitsubishi Chemical Holdings Corp., Japan's largest chemical maker, plans to acquire Mitsubishi Rayon via a tender offer. On hopes the deal will take place at a premium, investors are seen lapping up Mitsubishi Rayon stocks this morning. The Mitsubishi Chemical stock is trading modestly higher.
Tokyu Corp. shares extended their losses for the third straight trading day Monday, bucking the overall upbeat momentum of the market. The stock has drifted lower on reports that the railway firm likely posted a group operating profit of about 12 billion yen for the April-June quarter, down 12% year on year.
In economic news, according to a report from the government, Japanese core machinery orders rose 9.7% in June from the previous month, raising hopes that firms may have finished paring down their business investment plans. The rise was much bigger than the 2.9% increase expected on average by economists. It comes after orders fell 3.0% in May and 5.4% in April. The Cabinet Office data also showed core machinery orders fell 29.7% from a year earlier in June. In the April-June period, core orders dropped 4.9% from the previous quarter.
In another news, Japan's current account surplus rose 144.4% from a year earlier in June, data from the Finance Ministry showed Monday, marking the first increase in 16 months and boding well for the nation's export-reliant economy. The surplus in the current account, the broadest measure of Japan's trade with the rest of the world, stood at Y1.153 trillion in June before seasonal adjustment, the data showed.
In the currency market, the U.S. dollar traded at the lower 97 yen level early Monday in Tokyo after hitting a two-month high in the upper 97 yen level in New York on Friday following the release of the U.S. job data. The yen is currently trading at 97.27 to the U.S. dollar.
The Korean market has given up a good portion of its early gains due to profit taking at higher levels. Bank, shipbuilding, airlines and automobile stocks are trading firm. Bank stocks are exhibiting a mixed trend while energy and steel stocks are showing some weakness.
The KOSPI, which rose to 1,588 earlier in the day, is currently trading at 1,579, up 3 points or 0.19% over its previous close.
In the automobile space, Ssangyong Motor has vaulted again, gaining 15% in the process. Kia Motor and Hyundai Motor are up with modest gains. Shipbuilders are also trading mostly higher.
Bank stocks Woori Finance, Shinhan Financial and KB Financial are trading up by 1% - 2%. Korea Exchange Bank is up by nearly 1%.
Among technology stocks, Hynix Semiconductor and LG Electronics are trading with notable gains, while LG Display LCD and heavily weighted Samsung Electronics are exhibiting weakness.
Oil stocks are trading mixed. In the steel space, Hyundai Steel and POSCO are trading modesty lower. Among airliners, Korea Airlines is up by 2.2%, while Asiana Airline is trading up 4.5%. Among telecommunications stocks, KT Corp. is up nearly 2% and SK Telecom is trading lower.
Among other markets in the region, Hong Kong is up sharply with its benchmark index Hang Seng gaining nearly 2% or 400 points. Indonesia is also trading notably higher. Taiwan and New Zealand are trading with modest gains, while Shanghai has shed gains and is trading flat. Stock markets across the region had turned in a mixed performance last Friday.
On Wall Street, buoyed by encouraging economic data, stocks rallied sharply and ended on a firm note last Friday. Buying interest in stocks was sparked by a Labor Department report showing that the pace of job losses slowed by even more than economists had been anticipating in the month of July.
The report showed that non-farm payroll employment fell by 247,000 jobs in July following a revised decrease of 443,000 jobs in June. Economists had been expecting employment to fall by 325,000 jobs compared to the drop of 467,000 jobs originally reported for the previous month. The Labor Department also said that the unemployment rate unexpectedly edged down to 9.4% in July from 9.5%, recording a decrease for the first time since April 2008.
The Dow closed up by 113.81 points or 1.2% at 9,370, the Nasdaq moved up by 27.09 points or 1.4% to 2,000, and the S&P 500 ended up 13.4 points or 1.3% at 1,011.
Major European markets closed notably higher, with the French CAC 40 index and the German DAX index posting gains of 1.3% and 1.7% respectively, while the U.K.'s FTSE 100 index rose by 0.9%.
Oil prices turned notably lower on Friday after giving back an early rally amid lingering demand worries. A stronger U.S. dollar also lowered the hedge appeal of commodities. Light sweet crude for September dropped to US$70.93 per barrel, down US$1.01 per barrel. Prices rose as high as US$72.84 before later touching as low as US$70.38.
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