Asia stocks rose early Tuesday, staging a partial recovery from sharp previous session losses, even as political uncertainty in Greece cast a shadow over the markets.
Japan’s Nikkei Stock Average JP:100000018 +0.58 percent added 0.7 percent after plunging 2.8 percent on Monday, while South Korea’s Kospi KR:SEU +0.46 percent gained 0.4 percent, and Australia’s S&P/ASX 200 index AU:XJO +0.09 percent put on 0.3 percent.
The firm start in Asia came despite a mild fall for the US Dow Jones Industrial Average DJIA -0.23 percent and slim gains for the S&P 500 SPX +0.04 percent overnight, as investors mulled the outlook for the debt-laden euro zone following French and Greek elections over the weekend seen as a rejection of austerity programmes. Read more on the US session.
Talks in Greece have so far failed to secure a cross-party coalition after the nation’s president gave New Democracy leader Antonis Samaras three days to put together an alliance on Monday. Failure to form a stable government would result in fresh elections in Greece. Read more on the Greek election.
“There are now serious doubts about the country’s ability to carry out the European Union and International Monetary Fund-mandated austerity measures,” said IHS Global Insight analyst James Goundry.
The uncertainty kept the euro relatively weak against the yen, although the US dollar moved back above the JPY 80 level in early Tuesday trading, helping technology and car exporters’ stocks rebound a little from Monday’s battering.
Shares of Hitachi Ltd JP:6501 +13.42 percent rose 2.4 percent, Advantest Corp. JP:6857 +2.28 percent ADTTF +22.95 percent climbed 3.2 percent, Tokyo Electron Ltd JP:8035 +0.88 percent TOELF -5.76 percent added 2 percent, and Toshiba Corp. JP:6502 +2.27 percent TOSYY +2.29 percent traded 2.9 percent higher ahead of its earning report due after the market close.
In the auto sector, Honda Motor Co. JP:7267 +1.54 percent HMC -1.43 percent up 1.9 percent after Credit Suisse upgraded the shares to outperform and hiked its price target, while Nissan Motor Co. JP:7201 +1.96 percent NSANY -0.66 percent gained 1.4 percent.
In Seoul, Korea’s key shipbuilding sector showed strength, as Samsung Engineering Co. added 1.5 percent, and Daewoo Engineering & Construction Co. put on 1.4 percent.
In Sydney, gains for resource firms supported the broader market. Index heavyweight BHP Billiton Ltd AU:BHP +0.26 percent BHP -0.50 percent added 1 percent, and Rio Tinto Ltd AU:RIO +0.22 percent RIO +0.25 percent firmed by 1.1 percent.
Australia’s federal budget was due to be handed down later Tuesday, with the government expected to deliver a modest 1.5 billion Australian dollar ($1.5 billion) surplus for the current year.
“The budget is expected to confirm a further tightening of fiscal policy to achieve a 2012-2013 surplus, effectively placing a greater burden on the Reserve Bank of Australia to support growth,” said Stan Shamu, strategist at IG Markets in Sydney.
Last week, the nation’s central bank delivered a surprise half-percentage-point cut to its policy interest rate. Read report on Australia rate cut.
“This will probably result in an extended dovish cycle and weigh on the Australian dollar,” Shamu said. -By Virginia Harrison