Hong Kong: Asian stocks edged up on Tuesday and were set to score their biggest monthly rise in a decade as some investors bet the most painful stretch of corporate earnings damage may be over and bought Asian technology shares.
As the first quarter and Japan’s financial year draws to a close, stocks, oil prices and higher-yielding currencies gained after a one-day battering on news that the US government was considering pushing General Motors into bankruptcy.
Government bonds retreated as equity markets regained their composure, while the dollar slipped as investors favoured riskier assets.
Asian stocks outside Japan were set to finish the first quarter with a dip of 0.7% but were up 15% in March, what would be the largest rise since 1999.
“There has been a huge change in sentiment. Rather than anticipating huge sell-offs in the US, we’ve been anticipating rallies,” said Peter Wright, a dealer with Burrell Stockbroking in Sydney.
Many stock markets have thrashed in ranges near last year’s lows, with investors cautious about calling a turnaround as the global economy remains mired in a deep recession.
The economic fallout from the financial crisis is still taking a big toll on many economies, with data from Japan showing unemployment rising to a three-year high as the country’s grapples with its worst recession since World War Two.
But Japan’s Nikkei average climbed 0.9%, highlighting how many investors are looking beyond the bleak conditions and expect stimulus spending to help spur a recovery later in the year.
Japanese Prime Minister Taro Aso is expected to unveil the outlines of a spending package on Tuesday ahead of the Group of 20 gathering of rich and developing nations this week.
The MSCI index of Asia-Pacific stocks outside Japan rose 1.4% and is up 27% from a five-year low struck last November.
The Shanghai Composite has rebounded the most in the January-March quarter with a rise of 28%, making its the best-performing big equity market so far this year after being the hardest hit in 2008.
The tech-heavy Taiwan Weighted index was poised to finish the quarter with a 15% gain, boosted by incoming orders from China as part of its hefty stimulus spending.
Shares of Taiawn’s Compal Electronics, the world’s No. 2 contract laptop PC maker, rose 4% after it said demand from China ,the United States and Europe is picking up and its plans to add about 30% more employees by June.
“In the current downturn, tech shares like Compal whose sales and profits could still keep rising, are favourable,” said Andrew Deng, a vice president of Taiwan International Securities Corp in Taipei.
Government bond yields and swap rates climbed further due to the waves of expected supply tied to government stimulus spending and as expectations grow that some Asian central banks are done cutting interest rates.
Ten-year Japanese government bond yields was flat at 1.330% and held near a six-week high.
For Japan’s 2008-2009 business year ending on Tuesday, the benchmark yield has edged up about 5 basis points as the prospect of more supply to pay for spending has offset the economy’s sharp contraction and a likely return of deflation.
The dollar edged up against the yen but lost ground against most major currencies, surrendering some of its safe-haven gains from the previous day.
The dollar climbed 0.9% to ¥98.15, while the euro edged up 0.4% to $1.3525 on the back of sharp gainst against the yen. The Australian dollar jumped 2% to ¥67.60.
The dollar index, a gauge of its performance versus six major currencies, slipped 0.3% to 85.46.
For the quarter, the dollar index has risen 5.3%, its fourth straight quarter of gains.