Inside Financial Markets

asian markets fallAsian Stocks Rise, Paring Weekly Slide, on Economic Data

asian markets fallAsian Stocks Rise, Paring Weekly Slide, on Economic Data

Asian stocks rose, paring the benchmark equity gauge’s biggest weekly decline in two months, after reports from Europe to the U.S. boosted confidence in the economic recovery and the yen weakened against the dollar.

Asia’s largest carmaker Toyota Motor Corp. (7203), which gets about 75 percent of sales outside Japan, climbed 3.5 percent as the yen touched its lowest level in nearly three weeks against the dollar. BHP Billiton Ltd. (BHP) rose 0.8 percent in Sydney after copper jumped a second day. Amada Co., a Japanese maker of metal-cutting machines, jumped 5.6 percent after a report that its operating profit will rise by 150 percent.

The MSCI Asia Pacific Index advanced 1.4 percent to 131.43 as of 11:23 a.m. in Hong Kong as all 10 industry groups on the gauge climbed. More than four shares rose for each that fell. The measure is on course to drop 2.2 percent this week amid concern emerging-market economies are slowing and that the Federal Reserve will reduce its stimulus program, known as quantitative easing.

“The fact that the U.S. and European recoveries are improving, albeit fractionally, is a good foundation for global markets,” Matthew Sherwood, head of investment markets research in Sydney at Perpetual Investments, which manages about $25 billion, said in an e-mail. “Markets are clearly in a transitional phase. Investors firstly have to get through the removal of the price distortions that quantitative easing created.”

Factory output in the euro area is improving more than economists estimated and the fewest U.S. workers in more than five years applied for jobless benefits, reports yesterday showed.

Regional Gauges

Japan’s Topix index surged 2.2 percent. Australia’s S&P/ASX 200 Index jumped 1.2 percent and South Korea’s Kospi index advanced 1.1 percent. New Zealand’s NZX 50 Index was little changed. Singapore’s Straits Times Index gained 0.3 percent and Taiwan’s Taiex increased 1 percent. Hong Kong’s Hang Seng Index rose 0.7 percent.

The Shanghai Composite Index added 0.4 percent as Deutsche Bank AG raised China’s second-half growth forecast to 7.7 percent from 7.6 percent after HSBC Holdings Plc and Markit Economics yesterday released preliminary data showing manufacturing unexpectedly expanded.

Stocks extended gains after European Central Bank Governing Council Member Ewald Nowotny said the recent “stream of good news” from the euro-area economy has removed any need to cut interest rates from an already record low.

Gains Erased

The Asia-Pacific gauge has erased almost all this year’s gains, lagging a 15 percent surge in the S&P 500 Index as growth slows in China and speculation that the Fed will curb stimulus spurred investors to sell assets across Asia and emerging markets.

The MSCI Asia Pacific index yesterday traded at 12.6 times estimated earnings compared with 15 for the S&P 500 Index and 13.9 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Indonesia’s Jakarta Stock Index (JCI) has led declines among Asian developing markets this week, losing 8.7 percent through yesterday after worse-than-estimated economic data and a report showing the nation’s current-account deficit widened to a record in the second quarter. The gauge rebounded 1.2 percent today.

U.S. jobless claims in the month ended Aug. 17 declined to 330,500 a week on average, the least since November 2007, Labor Department figures showed yesterday.

Europe Manufacturing

In the euro area, a manufacturing gauge indicated expansion for a second month in August, rising to 51.3 from 50.3., London-based Markit Economic said yesterday.

Japanese stocks have led gains among developed markets this year amid optimism that record stimulus by the Bank of Japan and Prime Minister Shinzo Abe’s economic reforms will boost growth. The Topix index dropped about 12 percent through yesterday from its May 22 close, which was the highest since 2008.

Bank of Japan Governor Haruhiko Kuroda is among speakers at the Fed’s annual monetary conference in Jackson Hole, Wyoming, which comes as the U.S. central bank debates the timing of reductions to its record bond buying and other global regulators pump up accommodation. Fed Chairman Ben S. Bernanke won’t attend.

Futures on the Standard & Poor’s 500 Index (SPX) rose 0.1 percent today. The measure gained 0.9 percent yesterday as data showed improvement in global manufacturing and the American labor market. The Nasdaq Composite Index increased 1.1 percent following a three-hour trading halt on the Nasdaq Stock Market after a computer error.

Yen Weakens

Japanese exporters advanced as the yen fell 0.2 percent to 99.95 per dollar. Toyota Motor added 3.5 percent to 6,260 yen. Nissan Motor Co. gained 3.7 percent to 1,031 yen.

Raw-material producers advantaged as three-month copper futures rose a second day. BHP Billiton gained 0.8 percent to A$35.66 and Rio Tinto Group, the world’s second-biggest miner, climbed 1.4 percent to A$59.89 in Sydney. Jiangxi Copper Co., China’s largest producer of the metal, rose 1.2 percent to HK$15.42.

Amada gained 5.6 percent to 771 yen in Tokyo. The Nikkei newspaper reported the machinery maker will post an increase in profit that is 26 percent higher than its previous forecast.


Sanie Khan

Sanie Khan holds a deep knowledge of the financial markets in Pakistan. Based in Karachi, he has over 20 years of hands-on management experience in financial technologies and managing operations in the financial sector. He was the General Manager at the Pakistan Stock Exchange (PSX) for 17 years. He along-with senior members of Exchange

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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)