Hong Kong: Asian stocks edged up for a seventh day on Tuesday, boosted by hopes for a global economic recovery later in 2009, though the rising yen and falling high-yielding currencies suggested such optimism was limited.
Investors continued to move money stashed in government bonds to equities as their willingness to take risks recovered with low interest rates around the world and governments essentially writing blank cheques for plans to revive sagging economies.
Long-dated US Treasuries were under pressure after the 30-year yield surged overnight, rising above 3% for the first time since mid December, as the market demanded more incentive to lend to the increasingly indebted US government.
Expectations that US President-elect Barack Obama will offer $310 billion in tax cuts as part of a $775 billion plan to support the economy has fed into a recovery in investors’ willingness to take risks. Germany also was reportedly considering tax cuts to revive Europe’s largest economy.
Still, the global economy showed few signs of near-term improvement. US auto sales posted their weakest year since 1992 and total job losses were expected to be the highest in the post-war period.
The MSCI index of Asia-Pacific stocks outside Japan rose for a seventh straight day, up 1.1% to a two-month high and shrugging off weakness on Wall Street where investors took profits on last week’s run-up.
The index has rallied 34% since hitting a five-year low in November, though trading volumes may remain thin in January because of public holidays throughout Asia.
Japan’s Nikkei average climbed 1.1%, led by Fast Retailing Co Ltd 9983, which saw solid same-store sales at its clothing chain as a result of aggressive discounts.
South Korean stocks rose 2%. Technology companies were among the biggest boosts to the index, with Samsung Electronics 005930 up 4.8%.
Cautious dollar buying
The US dollar slipped against the yen, after hitting a near one-month high the previous day on expectations that a planned US stimulus package would help revive the faltering economy.
The yen, which has served as a refuge for investors from wild financial market volatility, strengthened broadly.
The dollar was down 0.3% to 93.16 yen, while the euro fell 0.5% to 126.65 yen.
The euro was off 0.3 against the dollar at $1.3603, having fallen 11 cents from a 3-month high reached in December.
Though the yen was supported, other popular havens like Japanese government bonds and US Treasuries were under pressure as the attraction of cheap stocks sucked in investors.