Hong Kong: Asian stocks rose on Monday to their highest level since the dark days following Lehman Brothers Holdings Inc.’s collapse last September while the US dollar fell, as a solid outlook for corporate earnings attracted investors to riskier, higher yielding assets and commodities.
European stocks rose more than 1% in early trade, while US equity futures also pointed to a higher open and crude rose above $64 (Rs3,097.6) a barrel as the global recovery trade accelerated after sputtering in June.
Sentiment was also helped after CIT Group Inc. clinched a last-minute $3 billion rescue by a group of bondholders and probably escaped bankruptcy.
CIT lends to nearly one million small and mid-sized US businesses.
Aside from more company earnings reports, the highlight for global markets this week will be Federal Reserve chairman Ben Bernanke’s testimony to Congress on Tuesday and Wednesday, especially any comments he makes on exit strategies from extraordinary actions taken to support the economy.
“We expect him to boost market confidence that the US central bank will do so in a way minimizing negative impact on price stability and the US dollar,” said Dariusz Kowalczyk, chief investment strategist with SJS Markets Ltd in Hong Kong. “We expect consolidation of equity markets after last week’s rally, modest correction in commodities, some narrowing of corporate CDS spreads, modest rebound in treasurys, and a small gain in the dollar,” he said in a note.
Japan’s markets were shut for a public holiday.
The MSCI Index of Asia-Pacific stocks outside Japan rose about 3% to its highest level since late September.
Gains were spread fairly evenly across the sectors, with materials, technology and financials leading.
Hong Kong shares soared 3.7% in their fifth straight winning session to a level last seen in the wake of Lehman Brothers’ collapse and after data last week reinforced investor faith in China’s economy.
The Shanghai Composite Index jumped 2.4% to a new 13-month closing high while turnover surged to its highest in nearly 26 months, with metal and coal shares strong.
But a warning from China’s top banking regulator on Sunday on the risks of surging bank lending and the dangers of unhealthy growth in the property market dampened sentiment.
Indian stocks rose 3%, closely followed by Korea’s 2.7% rise, while Australia, Taiwan and Singapore rose at least 1%.
Jungyoun Park in Seoul contributed to this story.