Tokyo: Asian shares rebounded on Thursday as fears receded that China’s policy tightening would slow demand, while strong Australian jobs data raised chances of a February interest rate hike and boosted the Aussie dollar.
Helped by an upbeat day on Wall Street, Asia stocks rose 1%, heading back towards a 17-month high reached on Monday. Regional stocks dropped on Wednesday after Beijing’s surprise increase of bank reserve requirements -- China’s strongest step yet to rein in asset inflation.
“The market is recovering as investors are relieved to see US shares recover fairly quickly after news of China’s monetary tightening moves,” said Lee Kyoung-su, a market analyst at Taurus Investment & Securities.
Australian stocks rose 0.6%, ending two consecutive days of losses, with strong jobs data pointing to the strength of the economy and rebounding Asian markets adding to buoyant sentiment.
The MSCI index of Asia-Pacific shares outside Japan rose 1%, reversing much of Wednesday’s decline.
Japan’s Nikkei average booked its highest close in 15 months, buoyed by tech firms such as Panasonic Corp on hopes the upcoming US earnings season will show a rebound in a key market for Japanese manufacturers.
“Technology issues in particular are going strong amid strengthening earnings expectations. Positive hopes are brewing ahead of key US technology company earnings, including Intel and IBM,” Lee said.
Tech and materials stocks gained ground after suffering on Wednesday on concern that China’s import demand would weaken if tighter policy cooled its rapid economic growth. Shipping firms also rose.
China’s key stock index ended 1.4% higher, with banks and property stocks firmer a day after the market sank more than 3%.
“The short-term correction seems to be over. The rate adjustment is reasonable, suggesting the next step in tightening will not come soon,” said Cao Xuefeng, an analyst at Western Securities in Chendu.
Mizuho Financial Group rose after Bloomberg reported the bank is considering a rights offering to boost capital, citing people familiar with the matter.
A rights offering would likely lead to less dilution of shareholder value than a straight share offering, which the market has been expecting, analysts said.
However, Hong Kong shares trimmed gains in volatile trade, ending slightly lower.
Seoul shares rose 0.9%, fueled by rises in technology issues such as Samsung Electronics ahead of Intel results, while Posco slipped ahead of its quarterly results.
A rebound had already begun in some markets by late Wednesday as investors reckoned China’s step confirmed a broad economic recovery and threatened neither growth nor corporate profits, with eyes turning to US earnings.
After a week of signalling tighter monetary conditions, the central bank surprised markets on Thursday by leaving the interest rate on its three-month bills unchanged. Some traders said it signalled the central bank would now take a breather from its tightening campaign.
Taiwan shares closed up 1%, with computer maker Acer hitting a 10-year closing high, while shares in India and Singapore rose less than a percent.
But some investors remained wary, noting that Alcoa’s results early this week had disappointed.
“Hopes for a recovery in the economy and earnings have returned thanks to the stable state of the US economy and currency markets, though investors might be getting a little ahead of themselves in terms of the speed of recovery in earnings,” said Masaru Hamasaki, senior strategist at Toyota Asset Management.
In Australia, jobs data for December beat forecasts and the market priced in a 75% chance of a rate rise at the next policy meeting, sending the Aussie dollar up and the low-yielding yen down.
The Australian dollar hit a two-month high versus the US dollar.
Oil rose past $80 a barrel as traders moved to cover short positions, taking advantage of a drop to 2010 lows the previous day on surprise gains in US distillates and crude stocks.