Singapore: Asian stocks rose on Wednesday as investors cheered Apple’s strong earnings and on optimism that China may roll back policy tightening measures later this year, while the euro firmed ahead of euro zone’s bank stress test results later in the week.
The dollar was on the back foot, slipping against a currency basket and coming under selling pressure versus the yen as Japanese exporters sold the US currency.
“A rise in US share prices late on Tuesday appeared to be driven by speculation of more easing steps from the Fed. Thus, the lack of a hint on further easing in his testimony could hurt the dollar,” said Katsunori Kitakura, chief dealer at Chuo Mitsui Trust and Banking Corp.
The MSCI index of Asia Pacific stocks outside Japan rose about 0.7%.
Shares in Hong Kong rose more than 1%, led by material and resource issues on the back of higher commodity prices and speculation that China would roll back policy tightening later this year to support growth.
Shanghai stocks gained 0.3%, extending a 4% rally this week on speculation that China might relax policy in the second half of the year as economic growth slows down. .
“There is more market buying interest in high-beta material stocks, suggesting a less pessimistic market view about a double dip economic downturn of the Chinese economy,” Julius Baer said in a note, referring to stocks that tend to have a higher risk profile so can rise faster than other stocks during a rally.
The Hang Seng was well supported by index heavyweight HSBC, which rose 2.2%.
Among the biggest gainers on the Shanghai market, Shanghai Aerospace Automobile Electromechanical Co jumped 8.7% and Xi’an Aero-engine PLC gained 6.7%.
However, Japan’s Nikkei average inched down 0.2%, weighed down by worries about a stronger yen and doubts over the US economic recovery as the market awaited events later this week, including the results of European bank stress tests.
While charts suggest recent falls in the Nikkei may be coming to an end, a number of lacklustre US indicators including Tuesday’s housing starts are keeping investors wary, with few willing to actively buy before Japanese earnings pick up steam next week.
“We still can’t rule out the possibility that some speculative moves ahead of events -- the bank ‘stress tests’ this week and US jobs data -- will shrink risk-money, leading to a stronger yen,” said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.
Australian stocks retreated from highs to end up 0.2% as grocery chains slipped and BHP Billiton’s cautious outlook put a lid on gains in the top miners.
BHP shares had been expected to be up at least 2%, based on stronger metals prices overnight, but the stock closed up 1.2% after its June quarter iron ore output came in slightly lower than expected and the firm highlighted volatile near-term demand from its biggest customer, China.
Woolworths, Australia’s biggest retailer, fell 1.8%, after reporting slim fourth-quarter sales growth, roughly in line with expectations, but disappointing for a company that typically beats forecasts.
South Korean shares rose 0.7%, led by steelmakers such as POSCO after prices for steel products in China rose.
“There had been worries that POSCO may have to slash its product prices yet again in the fourth quarter on the back of recent falls in Chinese steel prices,” said Kim Hyun-tae, an analyst at Hyundai Securities. “The price rises have eased those fears.”
Taiwan stocks ended down 0.1% as Apple’s better-than-expected results failed to bolster optimism over the business outlook for its suppliers like Largan Precision.
Largan, which contract manufactures lenses used in Apple’s iPhones, dropped 2.8%. Hon Hai Precision, another Apple supplier, was off 0.4%.
Shares in India rose more than half a percent, while those in Singapore shed as much.
Indonesia’s stock index hit a record high, as investors bought into banks, consumer plays and resource firms, attracted by strong economic growth, healthy domestic demand and political stability.
Gold edged down in Asian trading as investors shifted some of their money into firming equities. However, it held near $1,190 an ounce in early European trading.
Oil rose after Tuesday’s strong US corporate earnings raised optimism over the strength of economic recovery in the world’s largest economy.