Asia Pacific stocks closed largely higher on Wednesday, August 08, 2012, on growing hopes for new of stimulus from central banks around the world to stimulate their economies. But weak opening of the European bourses and negative US index futures as well as caution ahead of Chinese economic data trimmed intraday gains.
The riskier assets have enjoyed a strong run for third straight day on expectations that the European Central Bank would soon take action to resolve the euro area's debt crisis after the ECB indicated last Thursday that it may start buying government bonds again to help lower borrowing costs in Spain and Italy, albeit under strict conditions that have yet to be fully worked out.
Meanwhile market pundits are predicting that the Federal Reserve will jolt its economy via quantitative easing, under which the Fed buys bonds such as Treasury notes and mortgage-backed securities held by banks, pumping the economy full of liquidity to spur greater recovery.
Boston Fed Bank President Eric Rosengren said on Tuesday that the Fed should launch an aggressive open-ended bond buying program of whatever size and duration needed to get the economy back on its feet, signaling support from some US policymakers for aggressive steps to boost the flagging economy.
Investor are also hoping that China central bank would loosened quantitative measures further in second half of 2012 after weekend statement from the People's Bank of China that it would continue to strengthen the pre-emptive adjustment and fine-tuning of monetary policy in the second half of this year and boost its efforts in the development of real economy.
But, weakness European and US index futures on Wednesday capped on the upside. German DAX futures retreated 33.50 points to 6,931. French CAC futures receded 17 points to 3,437. FTSE futures recouped 1.50 points to 5,795. Swiss futures erased 21 points to 6,434. Dow Jones Industrial Average Index futures fell 15 points to 13,104. Standard & Poor's 500 Index futures receded 1.70 points to 1,395. A Nasdaq Composite Index future was edge down 0.50 point to 2,709.
Trading volumes turnover were relatively thin as investors opted sideline ahead of the Chinese inflation, factory output and retail sales data. Analysts expect inflation to fall further, which would give authorities in Beijing room to shore up slowing growth by easing credit without fear of igniting a spike in consumer prices.
MSCI's broadest index of Asia-Pacific shares wrapped day with 0.4% gains on Wednesday, registering fifth day of straight rally. In the Asia Pacific region, the Japan's Nikkei225 index and South Korea's Kospi Composite both closed 0.9% higher, while Singapore's Strait Times index erased 0.5% down, making the top gainer and loser respectively in the region.
Amongst other regional bourses, Australia's All Ordinaries index gained 0.5%, while New Zealand's NZX50 index erased 0.1%. Indonesia's Jakarta Composite index added 0.1%, Malaysia's KLSE Composite rose 0.3%, and Taiwan's Taiex jumped 0.3%. China's Shanghai Composite index added 0.2%, but Hong Kong's Hang Seng index ended marginal 0.04% lower and India's BSE Sensex closed edged 0.01% down.
Back to country wise performances, South Korea's Kospi added 0.9% to 1,903.23 as sentiment improved a day ahead of a Bank of Korea meeting where policy makers are expected to lower interest rates to stimulate the economy.
Tokyo market benchmark Nikkei Stock Average closed session 0.88% higher at 8,881.16, while broader Topix index escalated 1.94% to 745.64. Upward momentum mainly underpinned on growing hopes for new of stimulus from central banks around the world to stimulate their economies. Meanwhile strong rally in the index futures also boosted risk sentiments. Investors bought stock index futures ahead of Friday, when the special quotation fixing for August stock index options will be calculated. Market players hoping the strike price will approach 9,000 yen.
Exporters were sharp higher, with Sony Corp added 0.9% to 912 yen, Nissan Motor Co 1.3% to 778 yen, Honda Motor Co 1.4% to 2,535 yen, and Fanuc Corp 1.3% to 12,350 yen. Sharp Corp climbed up 2.7% to 188 yen as investors chased for bottom fishing after steep 32% slide in previous two sessions after it reported a first-quarter loss and revised its forecast to a full-year operating loss of 100 billion yen from a previously estimated 20 billion yen operating profit.
Nikon Corp advanced 2.6% to 2,270 yen on newspaper report that Intel Corp would inject tens of billions of yen in costs for the company to develop next-generation 450mm semiconductor wafers with a view to commercializing the product by 2018.
Dainippon Screen Manufacturing Co dropped 8.9% to 472 yen after the precision machinery maker cut its operating profit forecast for the year ending March 2013 by 77%, citing chipmakers and some foundries in the semiconductor industry had cut capital investment further due to slowing global growth.
Pioneer Corp declined 7% to 199 yen after the company revised down its full-year operating profit by 17.7% due to stronger yen against the euro and falling sales of optical disc drive-related products.
Mainland China stock market wrapped the day slightly above the neutral line, with the benchmark Shanghai Composite index up by 0.16% from prior day to 2,160.99, registered fourth day winning streak in row, after moving in tight range entire day. Market participants continued hunting undervalued stocks on speculation that domestic government would unveil stimulus plans seeking to counter the economic slowdown. But gains on the upside were limited as investors cautious to hold more risky assets amidst release of industrial production and inflation data tomorrow. Market pundits are predicting that Chinese industrial production may rise nearly 10% last month from a year earlier while CPI probably decelerate below 2% in July.
Brokerage houses went higher after China Securities Finance Corp increased its registered capital to 12 billion yuan from 7.5 billion yuan, enabling it to lend as much as 120 billion yuan to domestic brokerages for margin trading and short-selling services. China Securities Finance Corp is an intermediary, which borrows cash or securities from banks, fund management companies and insurers and lends them to brokerages. Citic Securities added 0.3% to 12.21 yuan, Haitong Securities Co 0.3% to 9.84 yuan, and Hong Yuan Securities Co 1.8% to 19.12 yuan.
But Hong Kong's Hang Seng index fell marginally to 20,065.52 as investors became cautious ahead of the release of the key economic data in China. Among blue chips, Resources Enterprise rose 2.2% to HK$23.3; while Esprit Holdings dropped 12.2% to HK$11.20 as Barclays Plc advised selling for the apparel retailer share after they rallied 28% yesterday, the most in 14 years, making them the biggest blue-chip gainer and loser. Meanwhile, most of market heavyweights were mixed, with Market heavyweights were little changed. Both China Mobile and HSBC edged up 0.2% to HK$89.15 and HK$67.5. Standard Chartered was 0.8% firmer at HK$159.3 after yesterday's 15% plunge as well as on ex-dividend and Moody's didn't revise its rating. HKEX rose 0.9% after result announcement. CHONG HING BANK declined over 3% as net profit tumbled. China Overseas Land & Investment fell 2% to HK$17.68.
India's benchmark indices cut almost the entire intraday gains and provisionally settled almost unchanged for the day after slipping into the red to hit fresh intraday low in late trade. BSE Sensex settled down 1.22 points at 17,600.56.
Mahindra & Mahindra (M&M) jumped after strong Q1 results. Index heavyweights ITC hit a record high. FMCG major, Hindustan Unilever also hit a record high. Index heavyweight Reliance Industries (RIL) edged higher on reports the oil ministry has agreed to conditionally approve the capital expenditure plans of RIL and its partners to make fresh investments for increasing production of natural gas at D6 oil and gas block in the eastern offshore Krishna-Godavari basin. Bharti Airtel dropped to 52-week low after poor Q1 results. Ambuja Cements and UltraTech Cement hit record high. Grasim Industries hit a 52-week high. Wockhardt hit a record high.
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