Hong Kong: Asian shares broke a four-session winning streak, coming off an eight-month high struck earlier on Tuesday as investors pondered how much longer a heady three-month rally will last.
Improving global manufacturing data had lifted Asian shares but the rally lost steam as investors took profits later in the day. Riskier asset classes which rose on Monday stalled or fell in Asia, highlighting investor caution after a steady run-up in prices. Oil fell below $68 a barrel as investors took profit from a jump of at least 3% a day earlier, but analysts said sentiment remained bullish amid growing signs of economic recovery.
Reports on Monday showed easing contractions in manufacturing activity in the US, the euro zone and Britain last month, while China reported a further expansion in factory activity.
Encouraging signs: A man checks his mobile phone as he walks in front of an electronic stock board of a securities firm in Tokyo. Japan’s Nikkei rose 26.56 points, or 0.3%, to close at 9,704.31 on Tuesday. Itsuo Inouye / AP
“A recovery is well under way and the market is following positive economic news,” said Brian Eley, fund manager with Eley Griffiths Group Pty Ltd, which oversees 500 million Australian dollars (around Rs1,925 crore) in Australia.
Eley added materials, energy and cyclical stocks would show the strongest moves in the initial phase though he also warned the rally could fade.
“There is always some doubt as often these rallies can over-shoot the fundamentals,” he added. The MSCI index of Asian stocks outside Japan fell about 0.3% after hitting its highest since 29 September—weeks after Lehman Brothers Holdings Inc.’s collapse.
The regional gauge has nonetheless surged at least 60% from lows in early March, spurred by signs of stabilization in the battered banking sector and credit markets, and by hopes that the global downturn was bottoming out.
Japan’s Nikkei average advanced 0.3%, after at one point hitting its highest since 8 October, while Australia rose at least 1.6% as economic data raised hopes the nation could dodge a recession. Shares in Mumbai gained 0.2% while Shanghai rose half as much.
Other stock markets around the region, however, retreated. Hong Kong fell 2.6%, dragged in part by a 4.1% fall in shares of Industrial and Commercial Bank of China Ltd after Goldman Sachs Group Inc. was seen selling a stake in the Chinese lender.
Denny Thomas in Sydney contributed to this story.