News Column

Asian Stocks Rebound On Fed Minutes, Upbeat China PMI Data

May 22, 2014

CANBERA (Alliance News) - Asian stocks rose broadly for the first time in five days on Thursday, with fairly dovish comments from the FOMC minutes and encouraging manufacturing data out of China and Japan underpinning investor sentiment. Minutes from the Federal Reserve's April policy meeting showed policymakers discussing rate hike procedures and exit strategy, even though no new conclusions could be reached on the matter.

The Chinese market showed a muted reaction to upbeat manufacturing data, as a sell-off in coal stocks on concerns about climate change overshadowed earlier gains. The benchmark Shanghai Composite Index closed down 0.2% at 2,021, while Hong Kong'sHang Seng Index rose half a percent to finish at 22,954.

An index monitoring manufacturing activity in China came in with a score of 49.7 in May, a five-month high, the latest flash estimate from HSBC and Markit Economics revealed. That topped forecasts for a score of 48.3 and was up sharply from 48.1 in April. The improvement was broad-based with both new orders and new export orders back in expansionary territory.

"Disinflationary pressures also eased over the month and output prices increased for the first time since November 2013," said HSBC Chief Economist, China & Co- Head of Asian Economic Research Hongbin Qu.

Japanese shares rallied sharply, with a weaker yen and solid gains on Wall Street overnight triggering strong buying. Media reports that state-controlled Post Insurance Co. plans to increase investment in domestic stocks added fuel to bullish local sentiment. The benchmark Nikkei average jumped 2.1% to 14,338, its biggest single-day gain in a month, while the broader Topix Index added 1.7%.

Automakers Honda Motor, Toyota and Mazda rose 2-4%, while heavyweight Fast Retailing rallied 2.5%, Fanuc advanced 1.2% and SoftBank Corp added 2.6%. Subaru carmaker Fuji Heavy Industries soared 5.1% after JPMorgan Chase & Co. raised its rating on the stock. Sanrio Co. plunged 16.5% after Goldman Sachs Group cut its target price on the stock.

On the economic front, an index monitoring manufacturing activity in Japan came in with a seasonally adjusted score of 49.9 in May, up from 49.4 in April and touching a two-month high, Markit Economics said.

Australian shares gained ground, led by miners as iron ore futures recovered from record lows. The benchmark S&P/ASX 200 rallied a little over a percent to 5,480, with tentative signs of stabilization in the world's second-largest economy bolstering sentiment. BHP Billiton, Rio Tinto and Fortescue Metals Group rose 1-4%, while Alumina shares soared 7.1%.

In the banking sector, Commonwealth, Westpac, ANZ and NAB rose between 0.6% and 1.5%. Energy stocks also rose broadly after US crude futures rose to a one-month high on Wednesday on a government report showing a large drop in crude stockpiles. Woodside Petroleum and Oil Search gained about 1.2% each, Santos added a percent and Origin Energy jumped 1.9%. James Hardie Industries climbed 5.7% after the building materials manufacturer doubled its full-year profit and declared a special dividend.

In economic news, consumer inflationary expectations in Australia rose by 0.2 percentage points to 4.4% in May from 4.2% in April, a survey by Melbourne Institute showed.

Seoul shares rose modestly as the FOMC minutes and upbeat Chinese factory activity data encouraged investors to bet on riskier assets. The benchmark Kospi average rose 0.4% to finish at 2,016 after losing 0.2% the day before.

New Zealand shares snapped a five-day losing streak, as investors lapped up property stocks offering high dividends. The benchmark NZX-50 Index rose 0.4% to 5,129, with 28 of its components advancing. There was across-the-board buying in the property sector, with Kiwi Income Property Trust, Goodman Property Trust, Precinct Properties New Zealand and Argosy Property gaining between 0.4% and 1.1%.

Steel & Tube Holdings paced the gainers on the exchange, climbing 4.1% to USD3.08, while Telecom Corp, Port of Tauranga and Ryman Healthcare all closed up about a percent each. Telecommunications infrastructure firm Chorus lost 2.3% after the Commerce Commission announced a new deadline for its final decision on prices for copper-based broadband services.

In economic releases, a Reserve Bank of New Zealand survey showed that inflation expectations in New Zealand one-year ahead rose to 2.08% from 2.03%.

Elsewhere, India's Sensex was moving up 0.6%, Indonesia's Jakarta Composite Index was rallying 1.2% and the Taiwan Weighted average closed up 1.2%, while Singapore's Straits Times Index was marginally lower and Malaysia's KLSE Composite was down 0.1%. Taiwan's jobless rate declined in April after increasing marginally in the previous month, official data showed.

On Wall Street, the major averages rose about a percent each overnight, with consumer discretionary and energy stocks rallying, after minutes of the Federal Reserve's April meeting didn't provide any indication that an interest rate hike is imminent.

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Source: Alliance News

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