ASIA MARKETS: Asian Markets Pick Up Speed, Put Italy Vote In Rear-view Mirror
December 05 2016 - 11:09PM
Dow Jones News
By Willa Plank
Finance stocks among biggest gainers in Tuesday trading
Asian markets were broadly higher early Tuesday, tracking
overnight gains on Wall Street, as investors globally brushed off
Italian voters' rejection of constitutional reform.
Japan's Nikkei Stock Average was up 0.5%, Korea's Kospi was up
1.2%, Australia's S&P/ASX 200 was up 0.8%, and Taiwan's gained
1.0%.
The focus is "back to reflation and it's back to assessing
2017," said Chris Weston, chief market strategist at IG. While the
issues facing Italy are systemic, they are largely contained for
now, he said, adding that depending on the survey in question, most
Italians still favor being part of the European monetary union.
Finance stocks in Asia were among the biggest gainers on
Tuesday, helped by the calm global reaction to Italy's referendum.
In Hong Kong, banking giant HSBC (HSBA.LN) was up 2.7%, while in
Japan, shares of Nomura Holdings (8604.TO) gain 2.9%, while
Mitsubishi UFJ Financial Group (MTU) rose 1.2%. Down Under, shares
of National Australia Bank (NABZY) rose 0.5%.
Investors continue to bet on the so-called "reflation trade," on
hopes that President-elect Donald Trump will increase fiscal
spending, lower corporate taxes and ultimately boost growth and
inflation.
Those expectations were given a boost by encouraging economic
data out of the U.S. and China in recent days, as well as a deal
last week by key oil-producing nations to cut global crude oil
output, helping lift prices.
Overnight in the U.S., the ISM non-manufacturing index rose to
57.2 in November from 54.8 in the previous month. The positive
data, along with a largely muted reaction to the Italian results,
helped drive the Dow Jones Industrial Average to close up 0.2% on
Monday, while the tech-heavy Nasdaq added 1%.
In Hong Kong, the Hang Seng Index was up 0.7%, with the stock
market likely benefiting from Monday's launch of a trading link
between the city's exchange and Shenzhen, home to China's rising
tech and electronic device making firms. The agreement also opens
the door for Chinese investors to buy into some small cap
stocks.
The Shenzhen Composite Index was up 0.1%, outperforming the flat
performance on the Shanghai Composite Index .
In Australia, shares there were boosted by further gains in oil
prices to hit a fresh one-year high overnight. Prices are up as
many analysts raise hopes the Organization of the Petroleum
Exporting Countries is more likely to abide by this deal than
others from years past.
"Besides, they only must be on their best behavior for a few
months to get the market into a daily supply deficit," said Phil
Flynn, senior market analyst at the Price Futures Group, in a
note.
Among energy stocks, Woodside Petroleum (WPL.AU) was up 0.7%,
while Oil Search Ltd. j(OSH.AU) added 0.4%, with their gains capped
as oil prices retreated slightly in Tuesday's Asian trade.
Traders in Australia were also watching for a decision by the
interest-rate setting board of the nation's central bank due later
Tuesday, with economists expecting no change from the current
record low of 1.50% in the benchmark interest rate.
They are also awaiting data on Australia's economy, which are
due Wednesday. Economists predict a weaker economy in the third
quarter as mining investment continues to contract and as wages and
profit growth remain sluggish.
However, signs of weakness in the economy might prove temporary,
given recent stellar gains in key commodity prices like coal and
iron ore, the country's biggest resource exports, analysts say.
(END) Dow Jones Newswires
December 05, 2016 22:54 ET (03:54 GMT)
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