Asian markets surged for a fourth straight day yesterday as dealers followed a rally on Wall Street sparked by a French and German promise to back up beleaguered eurozone banks.
Adding to the sense of optimism was a decision by France, Belgium and Luxembourg to bail out Dexia bank, the first lender to be dragged under by the European debt crisis.
Tokyo closed 1.95 percent higher, or 168.06 points, at 8,773.68, Seoul ended 1.62 percent higher, or 28.58 points, at 1,795.02, Sydney’s S&P/ASX 200 gained 0.63 percent, or 26.6 points, to 4,227.6 and Shanghai edged up 0.16 percent, or 3.73 points, to 2,348.52.
Regional traders have been in a buying mood for several sessions as fears that a likely Greek default would be contagious eased slightly, thanks to top European figures saying everything possible would be done to protect other economies. That culminated Sunday with German Chancellor Angela Merkel joining French President Nicolas Sarkozy in saying they would help recapitalise the region’s banks.
Despite the lack of any details on what they would do, the announcement gave investors some confidence that leaders were coming together to overcome a crisis many fear could spark another global financial downturn.
The Shanghai market was boosted by China’s big four banks after sovereign wealth fund Central Huijin Investment bought stakes in each of them in a government move to shore up financial markets and boost confidence in the lenders.
Industrial and Commercial Bank of China surged 7 percent, Bank of China rose 8.8 percent, China Construction Bank was 6.4 percent higher and Agricultural Bank of China climbed 14.7 percent.
HONG KONG: Shares ended 2.43 percent higher yesterday, boosted by China’s big four banks after Central Huijin Investment, bought huge stakes in them.
The Hang Seng Index gained 430.53 points to end at 18,141.59 on turnover of HK$83.60 billion.
“Huijin’s buying can only support the market for a very short period ,” an analyst said.
Coal stocks lost ground with Yanzhou Coal Mining down 4.9 percent to 27.83 yuan and Guizhou Panjiang plunging the daily limit of 10 percent to 27.16 yuan.
SINGAPORE: Southeast Asian stock markets clawed higher yesterday, led by financials and commodity-related shares.
In Singapore, the Straits Times Index edged up 24.75 points, or 0.93 percent, to 2,693.05.
Banks outperformed the broader market as China bought shares in local banks to support stock prices, which eased fears of a hard landing.
DBS Group Holdings Ltd rose 2.5 percent.
KUALA LUMPUR: The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) resumed its prior technical rebound yesterday. It rebounded to its day high of 1,414.74 yesterday. Advancing counters outpaced declining counters by 593 to 171.
The FBM KLCI rebounded from its day low of 1,406.99 to its day high of 1,414.74 yesterday. It closed at 1,411.65 points, posting a day-on-day gain of 14.61 points, or 1.05 percent.
In other markets yesterday:
* Taipei added 2.59 percent, or 186.75 points, to 7,398.71.
* Manila closed 1.70 percent, or 68.69 points, higher at 4,109.27.
* Jakarta rose 80.67 points or 2.34 percent to 3,531.75.
* Bangkok rose 2.34 percent or 21.63 points to 944.80.
* Wellington rose 0.69 percent, or 23.30 points, to 3,396.15.
VIETNAM: The VN Index of Hochiminh Stock Exchange (STC) returned to fall nearly 2 points to 417.73 points, with over 40 percent of listed shares losing points.
The HNX Index gained points at the end of the trading session to 71 points after two falls. The trading value increased slightly from the previous trading session to reach 252 billion dong.
EUROPE: Europe’s main stock markets fell back yesterday with Slovakia looking increasingly unlikely to approve the boost to the eurozone bailout fund, adding to doubts over a Franco-German plan to fix the region’s debt crisis.
London’s FTSE 100 index of leading shares sank 0.82 percent at 5,354.80 points in afternoon trade, Frankfurt’s DAX 30 declined 0.66 percent to 5,808.42 points and in Paris the CAC 40 retreated 0.97 percent to 3,130.80.
By 1309 GMT, the FTSEurofirst 300 index was down 1.1 percent at 953.45 points.
Stocks retreated following Monday’s heavy rallies on hopes for European political action on resolving the eurozone debt crisis.
“Today, all eyes are on Slovakia (no, really) as the country is the last to vote on the new, expanded European Financial Stability Facility,” David Campione at Briefing.com wrote in a note to clients.
AMERICA: One of Wall Street’s quietest days in months ended mixed after investors spent the day waiting to see if Slovakia would block an expansion of Europe’s financial rescue program.
Slovakia’s decision came after U.S. stock markets closed. That country’s parliament rejected a bill to strengthen the powers of a regional rescue fund. The sixteen other countries that use the euro have already signed off on the bill, but the measure requires unanimous support.
There are ways around Slovakia’s opposition, but the move temporarily sets back efforts to address Europe’s debt jam, which has been the most important issue for financial markets for months. Investors worry that if Europe doesn’t contain its debt crisis, a default by the Greek government could deliver a devastating blow to European banks and cause them to freeze up lending.
The Dow Jones industrial average ended down 17 points after moving between small gains and losses throughout the day. The index traded within a range of only 82 points, the narrowest since July 20. The relatively tepid trading came a day after the Dow surged 330 points, its largest increase since Aug. 11.
During Slovakia’s 10-hour debate, European Central Bank head Jean-Claude Trichet warned that countries needed to act urgently to stem what he called a “systemic” crisis that threatened global financial stability.
“I think markets want to say `who cares about Slovakia,’ but the reality is every little country has to agree,” said Randy Warren, investment strategist at Exton, Pa.-based firm Warren Financial Service.
Greece has been on the brink of defaulting on its debt for months. If that happens, it would hurt European and U.S. banks by decimating the value of Greek government bonds they own. Those banks would then be less likely to lend to each other and to businesses. That could plug up an already weak global economy, with implications for everything from bank stocks to international trade.
The Dow lost 16.88 points, or 0.1 percent, to close at 11,416.3. The Standard & Poor’s 500 index rose 0.65 point, or 0.1 percent, to 1,195.54 The Nasdaq composite rose 16.98, or 0.7 percent, to 2,583.03.
Aluminum maker Alcoa Inc. plunged 5.6 percent in after-hours trading after reported that its earnings slumped from the previous quarter, suggesting demand from Europe has slowed.
Markets have been swinging wildly since early August, when Europe’s economy suddenly seemed closer to the brink of collapse.
Moves of more than 100 points for the Dow have become commonplace as traders react swiftly to every whiff of news coming out of Europe. The S&P 500 is up 8.8 percent since last Tuesday, when it traded 20 percent below its April peak. Had the S&P closed at that level, it would have put the index into what analysts call a bear market. The index is still down 5.1 percent for the year.
Many market watchers think the volatility will continue until heavily indebted countries like Greece, Spain and Italy have established a clear path out of their current debt mess. Some hope that the summer’s heavy selling may have reflected the worst of the market’s fears.
“It appears that barring an uncontrolled meltdown, the bottom is in,” said Warren.
In corporate news, Dollar Thrifty Automotive Group Inc. fell 2 percent after the car-rental company said it was taking itself off the market after failing to get acceptable takeover proposals from Hertz or other companies.
Discount retailer 99 Cents Only Stores Inc. rose 4.4 percent. Ares Management LLC and the Canada Pension Plan Investment Board have offered to buy the company for $22 per share in cash, a 7 percent premium from Monday’s closing price.
Alcoa is the first company in the Dow Jones industrial average to report third-quarter results. Many analysts hope that the upcoming wave of corporate earnings reports will pull investor focus away from Europe and back to the health of U.S. corporations.
Analysts expect earnings from S&P 500 companies to rise about 12 percent from the same period last year, according to data provider FactSet. Revenue is expected to rise 11 percent. Investors are concerned not only with companies’ performance over the last quarter but what they expect to earn over the next year. A series of gloomy forecasts could compound fears that the country could enter another recession.
Benchmark Currency Rates USD EUR JPY GBP CHF CAD AUD HKD HKD 7.7811 10.6088 0.1014 12.1160 8.5578 7.5582 7.7302 - AUD 1.0066 1.3724 0.0131 1.5673 1.1070 0.9777 - 0.1294 CAD 1.0295 1.4036 0.0134 1.6030 1.1323 - 1.0228 0.1323 CHF 0.9092 1.2397 0.0119 1.4158 - 0.8832 0.9033 0.1169 GBP 0.6422 0.8756 0.0084 - 0.7063 0.6238 0.6380 0.0825 JPY 76.7080 104.584 - 119.443 84.3650 74.5107 76.2071 9.8583 EUR 0.7335 - 0.0096 1.1421 0.8067 0.7124 0.7287 0.0943 USD - 1.3634 0.0130 1.5571 1.0998 0.9714 0.9935 0.1285 Bloomberg