Asia-Pacific markets rise for first time in three days on upbeat US data, firm Spanish bond

Asia-Pacific stock markets registered first gain in three consecutive days on Wednesday, with the Thomson Reuter Asia-Pacific index surged 1.74% at 148.83 while the MSCI Asia index (excluding Japan) escalated 3.05% at 459.24, as appetite for risk improved after upbeat US data, firm Spanish bond, and unexpected rise in German business and consumer confidence.

Investors across the regional bourses, exception being China, chased for bargain hunting following overnight gains in European and the US markets after stronger than expected and US economic data and upside surprise in German business sentiment data.

Asia-Pacific stocks posted a strong opening and managed to hold initial gains whole day as investors took heart from sharp gains in offshore markets. Wall Street surged nearly 3% overnight after US housing starts and building permits rose to a one-and-a-half year high in November, suggesting a nascent turnaround in the US housing industry.

 

The American Commerce Department said in a report that new house construction rose by 9.3% annually in November to 685,000, the best level since April 2010. Payrolls rose in 29 states last month, while the unemployment rate declined in 43 states, indicating the economy was recovering.

European stock markets ended with strong gains Tuesday as concern about sovereign debt crisis calmed a bit after fall in Italian and Spanish bond yields, surprise gain in German business confidence, reports of a Greek deal with private debt holders, and expectations of a huge take up of the European Central Bank's long-term financing program.

Spain successfully auctioned EUR5.64 billion of three and six month bonds, raising more than it had initially hoped, as borrowing costs dropped. The average yield on the three-month debt dropped to 1.735%, compared with 5.11% when the securities were last issued on Nov. 22. The average six-month yield fell to 2.435% from 5.227% last month. The yield on the 10-year Spanish bond fell to 5.05% from 5.15% late the prior day.

German business confidence rose to 107.2 from 106.6 in November, the Munich-based Ifo institute said today. The median economist forecast called for a drop to 106.

Back to countries, the Australian benchmark All Ordinaries index escalated 2% to 4,190.20, snapping two days losing streak, as investors chased for bargain hunting across the board after strong gains on offshore markets sparked hopes for a long-awaited Christmas rally. The market slipped off its highs after the Westpac/Melbourne Institute survey showed the expected pace of economic activity slipped below its long-term trend in September.

Australian resources stocks added 3.1% and energy 2.3% after sharp gains in commodities and oil prices. BHP Billiton rose 3% to A$35.13 and Rio Tinto gained 2.5% to A$61.73. Woodside Petroleum was up 1.22% at A$30.70, holding on to shaky gains after investors questioned the company's commitment to using the James Price Point site in Western Australia for its proposed Browse liquefied natural gas project, as cost estimates for the plant had ballooned to $US40 billion.

In New Zealand, the Wellington stocks rose for the first time in seven days in row, sending the NZX50 index 0.7% higher at 3223.07, joining a global rally on better US economic data and signs of progress with Europe's debt crisis. Within the index, 24 stocks rose, 15 fell and 11 were unchanged. Turnover was $84 million. Domestic shares were buoyed by positive data offshore despite local current account deficit numbers being worse than expected. Beat-up stocks including tapware maker Methven and Fletcher Building paced the advance.

In Japan, the Tokyo stockmarket closed higher, sending the benchmark Nikkei Stock Average 1.48% higher at 8,459.98 and broader TOPIX index up by 1% to 725.68 on Wednesday, 21 December 2011, following bullish overnight economic news and data from Europe and the US. Meanwhile weakening yen against the major currencies also underpinned risk appetite.

Shipping heavyweights advanced after Mitsui O.S.K. Lines Ltd. and Nippon Yusen K.K. creating an alliance with other shipping lines to curb falling cargo rates. Shares in Mitsui OSK Lines grew 1.8% to 288 yen and Nippon Yusen K.K.3.7% to 199 yen. Electric power & gas sector was lone underperformer in the TOPIX packs, suffered by steep selloff in Tokyo Electric Power Co, which slumped 9.8% to 211 yen, a two-month low, after a report that Japan's government plans to take a more than two thirds stake in the company in a de facto nationalization.

The Bank of Japan policy board voted unanimously at the end of a two-day meeting to leave its policy rate--the unsecured overnight call loan rate--in a 0.0%-0.1% range. The Bank of Japan decided to refrain from taking additional easing steps despite ongoing concern over Europe's debt crisis and the yen's strength, as relatively calm market conditions have provided time to gauge the effects of its previous easing measures.

In China, Chinese stocks fell sharply in the afternoon, washing out earlier gains and finishing at lowest level in more than 33 month, with the benchmark Shanghai Composite index tanked 1.12% at 2,191.15, a lowest level not seen since Mar. 16, 2009, when index closed at 2,153.29, on lingering concerns about the domestic economy and tighter liquidity woes. The report about the pension fund's injection of 10 billion yuan into the domestic stock market also failed to influence the market risk aversion mood.

The seven-day repurchase rate, a gauge of funding availability in the financial system, rose 36 basis points, or 0.36 percentage point, to 3.60% in Shanghai on Wednesday.

In Hong Kong, the benchmark Hang Seng index advanced 1.86% to 18,368.66, powered by broad based bargain hunting as improved German and US economic data and fall in Spanish bonds underpinned risk appetite. Investors largely ignored continued weakness in Chinese stocks. Turnover increased to HK$41.32 billion from HK$37.1 billion on Tuesday. Among blue chips, 45 stocks gained, and 3 fell.

In India, the key Indian benchmark shares indices ended over 3% higher, snapping a five day losing streak, on the back of short covering.. Further, firm opening of the European markets has also cheered the sentiment amongst local investors. All sectoral indices on the BSE traded in green, with Reliance Industries, capital goods, and financials led the gains. Consumer durables and energy stocks also traded higher. at provisional finish, the Sensex was up 510.13 points, or 3.36% to 15,685.21.

Among other Asian bourses, the South Korea KOSPI put on 3.09% to 1,848.41. The Taiwan TAIEX index added 4.56% at 6,966.48. Singapore Strait Times index added 2.25% to 2,673.32. Malaysia KLSE rose 1.35% to 1484.98. Indonesia Jakarta Composite index was up 1.12% to 3,794.27. Philippine PSEi gained 0.61% to 4,368.88.

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