Asia Pacific Market: Rallied on US budget deal, positive China service and US manufacturing data
Asia Pacific stock markets leapt higher on Thursday, January 03, 2013, extending the rally of previous sessions, as investors breathing a sigh of relief after the US Congress finally approved a deal to avert a damaging series of US tax rises, while delaying sharp spending cuts. Appetite for risk assets also supported by different reports which indicate expansion of US manufacturing and China's services industries. The MSCI Asia Pacific Excluding Japan Index rose 0.5% to 478.
The US budget legislation which was passed by the House of Representatives yesterday has boosted confidence and brought riskier assets back in fashion. The agreement between the Democrats and Republicans has effectively prevented the imminent and undesirable journey over the fiscal cliff; the simultaneous rise in taxes and cuts in government spending which could have resulted in a U.S recession.
American manufacturing grew slightly last month and factory hiring increased, suggesting that the economy had some momentum going into the New Year. The Institute for Supply Management, a trade group for purchasing managers, said on Wednesday that its index of manufacturing activity rose in December to 50.7. That is up from a reading of 49.5 in November, which was the lowest reading since July 2009, one month after the recession ended. A reading above 50 indicates growth, while a reading below signals contraction. A measure of employment increased last month to 52.7. That is up from 48.4 in November
China's official non-manufacturing Purchasing Managers' Index rose to 56.1 in December from 55.6 in November, according to a statement Thursday from the China Federation of Logistics and Purchasing, which issues the data with the National Bureau of Statistics. The December reading marks the third straight month of gains. The rise adds to recent signs of a rebound in the world's second-largest economy, and will likely boost market confidence in the country's economic outlook. A reading above 50 indicates expansion in non-manufacturing activity from the previous month, while anything below that indicates contraction. The data were issued after the CFLP said Tuesday its official manufacturing PMI, a companion index, was unchanged in December at 50.6.
In the Asia Pacific region, Australia's S&P/ASX 200 Index gained 0.8%, to the highest closing level since May 2011. New Zealand's NZX50 Index advanced 0.4%, to the highest close since December 2007. Singapore's Straits Times Index advanced 0.7% and Taiwan's Taiex Index climbed 0.7%. Hong Kong's Hang Seng Index (HSI) rose 0.4% and India's Sensex added 0.2%. South Korea's Kospi Index slid 0.6%. Markets in both China and Japan were closed today.
Back to country wise, Australia's share market closed higher for a second day, with the All Ordinaries Index up by 0.8% to 4761.4, while the ASX 200 has cracked through the 4700 point level for the first time since July 2011, buoyed by a last-minute budget deal in the U.S. that drove global equities and commodity prices sharply higher overnight. Australian resource related stocks went higher after commodity prices went through the roof last night thanks to optimism surrounding the mini fiscal cliff agreement. Oil prices rose by 1.4%, hitting a 4-month high. The Australian heavyweight BHP Billiton (BHP) rose by 0.8% while the smaller Rio Tinto gained 2.4%.
New Zealand's stock market closed solidly on first trading day of 2013, following gains on Wall Street overnight. NZ investors drove up companies that have featured on broker lists for 2013, such as PGG Wrightson and Ryman Healthcare. By the provisional closing, the NZX 50 Index rose 15.85 points, or 0.4%, to 4082.36.
South Korea's share market benchmark Kospi Average fell 0.6% to 2,019.61, with Samsung Electronics Co., which accounts for 20% of the gauge, and Hyundai Motor Co led retreat amid fears the weakening Japanese yen could hurt South Korean exporters.
Hong Kong's blue chip shares ended mostly higher after fluctuating between boundary line, on tracing the firmer trade on most of the Asian bourses and positive finish of overseas markets overnight. The benchmark Hang Seng Index escalated 86.62 points at 23,398.60, while Hang Seng China Enterprises Index advanced 89.57 points to 11,987.23. HK heavyweights were up. HSBC Holdings added 0.1% to HK$83.30, while China Mobile was edge 0.05% up at HK$91.45. Industrial and Commercial Bank of China advanced 1.9% to HK$5.81 and China Construction Bank Corp rose 1.1% to HK$6.50.
HK developers declined after the Land Registry today announced the number of sale and purchase agreements for all building units received for registration in December was 9,129, a decrease of 21.2% compared with November but up 63.1% year-on-year. Wharf Holdings dropped 1.7% to HK$60.80 and Cheung Kong 1.2% to HK$120.40.
India's share market closed modest higher on the third trading day of the week, led by oil & gas, metals, and technology stocks. The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) provisionally closed 38.66 points higher at 19,752.90.
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