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Asian shares advance, BHP bid boosts confidence

Asian shares advance, BHP bid boosts confidence
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First Published: Wed, Aug 18 2010. 08 35 AM IST
Updated: Wed, Aug 18 2010. 08 35 AM IST
Singapore: Asian stocks rose on Wednesday and the dollar inched up against the yen as a $39 billion takeover bid in the farm sector and earnings from two US retail giants boosted confidence in the corporate outlook.
The gains were limited though and the yen, seen as a safe haven, remained near a 15-year high against the dollar, following mixed data from the United States, showing higher producer prices while housing starts posted a weaker-than-expected rise..
The MSCI share index for Asia excluding Japan was up 0.41% following gains on Wall Street after retailing giants Wal-Mart Stores Inc, and Home Depot Inc beat earnings estimates.
The launch of an unsolicited $38.6 billion take-over bid by mining giant BHP Billiton Ltd for Canada’s Potash Corp of Saskatchewan Inc also helped improve sentiment.
Japan’s Nikkei average rose 0.5%, buoyed by short-covering after two days of falls.
Japanese government bonds dipped as investors turned to stocks and the benchmark 10-year yield rose 1.5 basis points to 0.950%, after touching a seven-year low of 0.920% the previous day.
Market players said, however, it was hard to see the benchmark Nikkei racking up substantial gains without a sustained weakening of the yen even though recent falls -- a 4% drop last week -- suggested a short-term rebound might be overdue.
“Today we’re seeing short-covering prompted by the overnight Wall Street rise, but the main players are day traders and they tend to dump shares fairly quickly when any rises lose steam,” said Norihiro Fujito, general manager of the investment research and information division at Mitsubishi UFJ Morgan Stanley Securities.
Nidec Corp, a precision motor manufacturer, jumped nearly 5% after the firm said it would buy the motors business of U.S. firm Emerson Electric Co.
The deal marks the latest move in Nidec’s aggressive expansion through acquisitions, and comes as the rising yen reignites a push by Japanese companies to snap up overseas assets and secure growth outside their sluggish home market.
Australia’s main share index eased on Wednesday, dragged lower by a sell-off in BHP Billiton after Canada’s Potash Corp spurned its takeover offer, raising concern BHP may come back with a hostile bid.
BHP Billiton shares fell 3.5% near a one month low, as investors braced for a possible bid battle.
“It is just BHP; one big story taking out a lot of points from the index,” Ben Potter, a research analyst at IG Markets said.
The euro dipped 0.1% to $1.2870. The euro rose 0.4% the previous day according to Reuters data, helped by solid demand at Irish and Spanish debt auctions that also spurred a narrowing in peripheral euro zone bond yield spreads.
But Moody’s Investors Service told Reuters in an interview on Tuesday that it still had enough doubts about the outlook for Spain’s public finances to keep the sovereign’s triple A rating under review.
The euro could come under pressure again if the market’s focus turns toward sovereign risks in the euro zone, said a trader for a Japanese foreign exchange broker.
Oil prices fell on Wednesday after an industry report signalled petroleum inventories in top consumer the United States were headed for a record, following an unexpected sharp increase in crude stocks last week.
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First Published: Wed, Aug 18 2010. 08 35 AM IST
More Topics: Markets | Global | Asia | Nikkei | Hang Seng |