ASIA MARKETS: Nikkei Surges 2.9%, Leading Asia Higher

Date : 11/05/2010 @ 8:20AM
Source : Dow Jones News
Stock : Canon American Depositary Shares (CAJ)
Quote : 39.02  -0.44 (-1.12%) @ 4:02PM

ASIA MARKETS: Nikkei Surges 2.9%, Leading Asia Higher

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By Chris Oliver

HONG KONG (MarketWatch) -- Most Asian stock indexes ended higher Friday, with shares of resource-related companies advancing on a surge in crude-oil and gold prices. In Japan, robust earnings from Nissan Motor Co. offset investors' worries about the strong yen.

Japan's Nikkei Stock Average rose 2.9%, its largest percentage increase since June 3. That followed a 2.2% gain Thursday.

Also gaining were Australia's S&P/ASX 200, up 1.2%; China's Shanghai Composite Index, up 1.4%; and Hong Kong's Hang Seng Index, up 1.4%.

South Korea's Kospi Composite and New Zealand's NZX-50 both lost 0.2%.

Markets in Singapore, India and Malaysia were closed for public holidays.

Helping to bolster sentiment in Japan, Nissan (NSANY) released stellar quarterly results and raised its full-year net-profit forecast to 270 billion yen from  ¥150 billion. Shares of the auto maker ended 6% higher.

"There were already hopes that the earnings would be good, and the figures turned out even better than expected," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management. The broader market's rise sparked a general rebound in auto shares driven by short-term investors, he said. Toyota Motor added 1.9%, while Honda Motor (HMC) gained 4.2%.

Response to the Fed

Investors' appetite for risky assets was whetted by Thursday's 2% rise in the Dow Jones Industrial Average (DJI). The U.S. blue-chip index reached its highest closing level since September 2008, partly in response to the Federal Reserve's decision Wednesday to launch a second round of quantitative easing, dubbed QE2, aimed at kick-starting the U.S. economy.

"There have been large responses [to the Fed's move] in all the relevant markets: yields lower, spreads tighter, stocks stronger, commodities higher and dollar weaker," said Greg Gibbs, currency strategist at RBS in Sydney.

Strategists in Asia, however, warned that countries in the region may brace themselves against the influx of money stemming from the Fed's actions. China is likely to tighten monetary policy before the end of the year, Standard Chartered said, as concerns over rising property prices continue to grow.

"The leadership still has some way to go in achieving its ultimate objective of stabilizing housing prices, particularly in the face of QE2 in the U.S. and widespread fear of further liquidity inflow," according to a research note from Standard Chartered.

Tokyo stocks showed little response to the Bank of Japan's decision to stand pat on its easy monetary policy. Sony Corp. was up 2.7% and Canon Inc. up 3.3%.

Bucking Japan's broader market, Resona Holdings Inc. fell 16.3% on a report that it was considering raising several hundred billion yen through a public stock offering. Resona confirmed this after the market closed, putting the figure at up to  ¥600 billion ($7.44 billion).

Commodity-related plays rallied across the region, with Zijin Mining up 3.5% and Shandong Gold-Mining up 4% in China; Sumitomo Metal Mining up 6.1% and Inpex up 2.3% in Tokyo; and BHP Billiton up 3.6%, Rio Tinto (RIO) up 4.8% and Woodside up 1.9% in Sydney.

Gold soared Thursday, with December futures setting a record intraday high of $1,393.40 in after-hours trading in New York. The rally took a breather in Asia's spot market, as gold recently slipped to $1,384.20 per troy ounce, down $8.70 from its New York close Thursday.

In Sydney, Macquarie jumped 3.8%, perhaps taking strength from its U.S. financial peers, although other banks were little changed, with Westpac up less than 0.1%.

HSBC Holdings , up 3.1%, led financial firms higher in Hong Kong. The shares were boosted by news that the bank sold its train leasing unit for 2.1 billion pounds ($3.4 billion).

Hang Lung Properties fell 6.5% after saying it will raise HK$10.90 billion ($1.41 billion) from a share sale to fund expansion in China.

After recent outperformance, auto makers helped pull Seoul down, with Hyundai Motor off 2.4%. Samsung Electronics and LG Display (LPL) both rose, though -- by 1.7% and 0.8%, respectively -- on a report that the two companies had received approval from the Chinese government to set up liquid-crystal-display plants.

Elsewhere in the region, Taiwan's Taiex was up 1.1%, while Indonesian shares rose 0.7% and Thai shares added 1%. Philippine shares were off 1.1%.

In foreign-exchange markets, the U.S. dollar got some respite as risk appetite improved.

Mike Jones, currency strategist at the Bank of New Zealand, said the continuation of the U.S. dollar's slide will depend on the nonfarm payrolls report.

"We suspect a weaker number will see markets speculate on QE3, dragging the dollar lower," he said.

The outcome of the Bank of Japan's board meeting pushed the yen up briefly against the dollar, but it quickly settled into its earlier narrow range.

The euro was buying $1.4217 against the dollar, from $1.4215 late Thursday in New York, and at  ¥114.34 against the yen, from  ¥114.69. The dollar was fetching  ¥80.69, from  ¥80.70.

December Nymex crude-oil futures fell 10 cents to $86.39 a barrel on Globex after hitting a new six-month high of $86.83 Thursday.

Shri Navaratnam in Singapore contributed to this report.


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