Asia’s stock markets surged yesterday Thursday October 6, boosted by another strong performance on Wall Street and hopes European leaders will come together to plan a route out of the region’s sovereign debt crisis.
Sentiment was also lifted by better-than-expected economic data out of Washington that eased concerns the US is slipping into recession.
German Chancellor Angela Merkel on Wednesday called on her eurozone counterparts to recapitalise the banking sector to help prevent Greece’s debt crisis from spreading to other nations.
Her view that helping the banks was “justified, if we have a joint approach” echoed comments from the EU’s economic affairs commissioner the previous day, and gave a much-needed boost to nervous investors.
Tokyo’s Nikkei 225 Index added 139.04 points, or 1.66 percent, to 8,522.02, turning buoyant after a rise in crude and precious metal prices overnight.
“In addition to talks of putting in place a system of backstops for European banks, US macroeconomic data have generally been solid, leading to an improvement in market sentiment,” said Yoshihiro Okumura, general manager of research at Chibagin Asset Management.
In Sydney, the benchmark S&P/ASX 200 put on 143.4 points, or 3.65 percent, to 4069.9, with gains across the board as Australian investors built on momentum from global markets. It was the largest daily surge since November 2008, during the depths of the global financial crisis.
“It seems the catalyst for this mini-rally we have under way is a belief that EU policymakers will finally be able to stem the rot that has destroyed the heart of the European economy,” said IG Markets analyst Cameron Peacock.
“Optimism seems to be growing that something will be done.”
HONG KONG: Shares soared 5.67 percent yesterday after a strong performance on Wall Street and hopes European leaders will agree a plan to resolve the eurozone debt crisis.
The benchmark Hang Seng Index jumped 922.01 points to 17,172.28.
However, some analysts were sceptical over the rally.
“Make no mistake, this is another bear market rebound, given the economic troubles around the world,” Eugene Law, chief executive of Convoy Investment Services, told Dow Jones Newswires.
SINGAPORE: Stocks closed higher yesterday, tracking a region-wide rebound. The Straits Times Index gained 74.41 points, or 2.94 percent, to 2,603.12.
Morgan Stanley said yesterday Asean markets were likely to continue to be driven by volatility in developed markets over the next couple of quarters. It maintained its relative positive outlook on Indonesia, neutral view on Thailand and negative view on Singapore.
KUALA LUMPUR: Bursa staged a follow-through rebound in step with regional stock markets yesterday. Advancing counters outpaced declining counters by 535 to 186.
The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) rebounded from its intra-day low of 1,381.17 to its intra-day high of 1,395.28 yesterday. It closed at 1,393.69, giving a day-on-day gain of 18.02 points, or 1.31 percent.
In other markets:
* Seoul’s Kospi rallied 2.63 percent, or 43.80 points, to 1,710.32.
* Taipei added 2.04 percent, or 142.85 points, at 7,132.0.
* Manila closed 1.76 percent, or 67.39 points, higher at 3,890.52.
* Jakarta jumped 4.55 percent, or 149.87 points, to 3,443,11.
* Bangkok rose 5.92 percent or 51.07 points to 913.72.
Shanghai and Mumbai were closed for public holidays.
VIETNAM: The VN Index of Hochiminh Stock Exchange (STC) gained points right after opening the trading session to close at 421.32 points, after hitting the peak of 423 points.
The HNX Index also increased over 2.5 percent to 72.1 points. The trading value increased nearly 30 billion dong from the previous trading session.
EUROPE: European shares rose yesterday, with a blue-chip index flirting with levels not seen in five weeks, as banking stocks climbed on rising hopes of coordinated action to recapitalise the lenders and shelter them from the region’s debt crisis. However, gains were capped by caution ahead of crucial interest rate decisions for the eurozone and Britain.
At 1113 GMT, the FTSEurofirst 300 index of top European shares was up 1.5 percent at 930.75 points.
In morning European deals, London’s FTSE 100 index won 1.33 percent to 5,169.76 points, Frankfurt’s DAX gained 2.04 percent to 5,585.84 points and in Paris the CAC 40 added 1.84 percent to 3,028.57.
AMERICA: The Dow Jones industrial average jumped 183 points Thursday after the European Central Bank moved to support that region’s lenders and U.S. retailers reported stronger September sales.
It was the third straight day of gains. The Dow has soared 434 points since Tuesday.
The European Central Bank promised to provide unlimited one-year loans to the region’s lenders through 2013. The goal is to shield banks from poorly functioning short-term credit markets, in which banks are becoming too worried about each other’s financial stability to lend money to one another. Germany’s DAX jumped 3.2 percent, and France’s CAC-40 rose 3.4 percent.
The loans are also meant to help protect the banks in the event Greece’s government defaults on its debt. If that happens the value of Greek bonds held by those banks would be likely to drop sharply, weakening the banks’ balance sheets and making it harder for them to lend.
Target Corp., Nordstrom Inc., Macy’s Inc. and other U.S. retailers reported sales that beat Wall Street’s expectations. While some of the sales were driven by deep discounts, analysts said the higher sales suggested the U.S. economy was not in another recession.
“The market has been pricing in an out-and-out recession, but the fact that consumer spending is holding up shows that we’re more likely to continue muddling through at a 1 to 2 percent growth rate,” said Brian Gendreau, market strategist at Cetera Financial Group.
The Dow Jones industrial average jumped 183.38 points, or 1.7 percent, to 11,123.33. It was the first time the Dow rose by more than 100 points for three straight days since a rally that began Aug. 11 and ended with a 763-point gain.
It was the 9th straight day the Dow has swung by more than 100 points, the longest such streak since November 2008, in the middle of the financial crisis. Markets have been extraordinarily volatile as investors react to the latest headlines out of Europe.
The S&P 500 rose 20.94, or 1.8 percent, to 1,164.97. The Nasdaq composite rose 46.31, or 1.9 percent, to 2,506.82.
Banks in Europe and the U.S. rallied. U.S. bank stocks rose sharply after Treasury Secretary Timothy Geithner told a Congressional panel that U.S. financial firms had a “very modest” exposure to Europe’s debt problems. Bank of America Corp. jumped 8.9 percent to $6.28, the biggest gain among the 30 stocks in the Dow. Morgan Stanley rose 4.8 percent to $15.18.
The European Central Bank disappointed some investors by announcing that it would keep interest rates unchanged. Analysts were hoping the bank would cut rates to encourage lending and give a boost to Europe’s sagging economy.
In the U.S., the Labor Department said the number of new applications for unemployment benefits rose slightly last month to 401,000. While that is a signal that the job market continues to be weak, the increase was slightly less than what Wall Street economists had predicted, a signs that layoffs are easing. Unemployment benefits typically need to fall below 375,000 to signal job growth.
The hopeful signs on the U.S. economy led investors to pull money out of lower-risk assets. That pushed yields higher on U.S. government debt as investors sold Treasurys. The yield on the 10-year Treasury note rose to 1.99 percent from 1.90 percent late Wednesday.
Corning Inc. rose 7.1 percent to $13.50 after it said it would increase its dividend and buy back shares. Apple Inc. lost 0.2 percent to $377.37 in choppy trading after company co-founder and former CEO Steve Jobs died Wednesday. Several analysts and large investors said they believe the company would continue to grow under new CEO Tim Cook.
Benchmark Currency Rates USD EUR JPY GBP CHF CAD AUD HKD HKD 7.7816 10.4429 0.1015 12.0099 8.4566 7.4928 7.5936 - AUD 1.0248 1.3752 0.0134 1.5816 1.1136 0.9867 - 0.1317 CAD 1.0386 1.3937 0.0135 1.6029 1.1286 - 1.0134 0.1335 CHF 0.9202 1.2349 0.0120 1.4202 - 0.8860 0.8979 0.1183 GBP 0.6479 0.8695 0.0085 - 0.7041 0.6239 0.6323 0.0833 JPY 76.6535 102.868 - 118.304 83.3018 73.8082 74.8008 9.8505 EUR 0.7452 - 0.0097 1.1501 0.8098 0.7175 0.7272 0.0958 USD - 1.3420 0.0130 1.5434 1.0867 0.9629 0.9758 0.1285 Bloomberg