Asia stocks edge up to 10-month high as earnings reassure

Asia stocks edge up to 10-month high as earnings reassure
Comment E-mail Print Share
First Published: Tue, Jul 21 2009. 08 57 PM IST
Updated: Tue, Jul 21 2009. 08 57 PM IST
Hong Kong: Asian stocks edged to another 10-month peak on Tuesday after strong company earnings reassured investors that a US economic recovery is taking root, prompting a further shift into riskier assets from the safe-haven dollar.
Gains were kept in check as some market players booked profits on the run-up in equities and higher-yielding currencies, knocking the Australian dollar down from a five-week high against the US currency.
Central bankers are starting to sound a note of optimism as well.
Minutes from the Reserve Bank of Australia’s last meeting in July showed it had become more optimistic about the economic outlook at home and abroad.
But Federal Reserve chairman Ben Bernanke reassured investors that loose monetary policy with interest rates near zero would be around for a while longer.
Writing in The Wall Street Journal, Bernanke said the Fed’s accommodative policy would be warranted for an extended period even while laying out a road map for how the Fed could mop up the massive reserves injected into the financial system.
Bernanke delivers his twice-yearly testimony to Congress later in the day.
“It doesn’t look like he’s sounding too anxious or urgent about removing excess stimulus from the system,” said Sue Trinh, a senior currency strategist at RBC Capital Markets in Sydney.
Stocks around the world have gained this month as major banks show more signs of healing from the credit crisis and companies are more confident about demand improving.
Analysts said the last-minute deal by struggling US commercial lender CIT Group Inc. to secure emergency financing also boosted investor confidence.
“News of the CIT deal and positive economic data from the US helped markets start off quite strong,” said a market analyst at Goodmorning Shinhan Securities Co. Ltd in Seoul, Lee Sun-yeop. “Combined with a positive earnings outlook and growing upward momentum, we are seeing shares hitting a new high for the year.”
Japan’s Nikkei stock average rose 2.7%, getting a lift from the renewed optimism on the economic outlook.
In an expected move, Prime Minister Taro Aso dissolved the lower house of parliament and called for an election on 30 August. The opposition Democratic Party leads in the polls and is threatening to end a half-century of near-unbroken rule by the Liberal Democratic Party.
The MSCI index of Asia-Pacific shares outside Japan edged up about 0.2%, losing a little steam in afternoon trade after the regional gauge touched its highest level since late September when equity markets were crumbling in the wake of US investment bank Lehman Brothers Holdings Inc.’s collapse.
So far this year the MSCI Asian benchmark has risen 39%, rebounding from a record 53% plunge last year and outperforming developed markets.
South Korea’s Kospi index rose 0.7%, followed by Taiwan’s 0.2% jump. Stocks in Hong Kong, Australia and Singapore were almost flat. Shanghai-listed shares posted their biggest one-day drop of 1.6% in five weeks as the world’s largest initial public offering so far this year took subscriptions.
China State Construction Engineering Corp. is taking subscriptions on Tuesday and Wednesday. It set a higher-than-expected price late on Monday, aiming to raise as much as 50.16 billion yuan (Rs35,814 crore).
Jungyoun Park in Seoul, Charlotte Cooper and Elaine Lies in Tokyo contributed to this story.
Comment E-mail Print Share
First Published: Tue, Jul 21 2009. 08 57 PM IST