Tokyo: Asian shares jumped on Thursday, buoyed by strong US earnings and global recovery hopes after China’s economy grew faster than forecast in the second quarter.
Tokyo shares hit a one-week high and shares elsewhere in Asia -Pacific powered to their highest in a month. The dollar and euro held broadly steady against the yen, base metals prices rose and crude oil futures edged higher.
But markets were keeping a wary eye on the fate of CIT Group Inc a US lender to thousands of small and mid-sized businesses, after bailout talks with the government ended, a move that could ultimately drive it to bankruptcy.
US stocks surged 3% or more on Wednesday, with the S&P 500 racking up its three best days since March, after results from bellwether Intel Corp beat expectations to lift hopes for a rebound in technology spending and improved corporate profitability.
“Added to hopes for a recovery in US corporate earnings, investors are generally welcoming growing signs of a recovery in US economic data,” said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities in Tokyo.
China said its second quarter gross domestic product rose 7.9% against the previous year, beating expectations for a 7.5% rise, while its first half GDP rose 7.1% against a year earlier.
Optimism was reinforced in the United States by manufacturing data that suggested the recession is abating, as well as minutes from the Federal Reserve’s most recent policy-setting meeting that showed officials judged that the US economy’s contraction was slowing.
Asian shares across the region rose 1.8% to their highest since mid-June.
Japan’s benchmark Nikkei outperformed with gains of 2.2% to 9,475.04, its highest in a week, as high-tech exporters climbed with the additional boost of the weaker yen.
Australian shares rose nearly 2%, close to a one-month high, as miners rose on firmer base metals prices, with the benchmark S&P/ASX 200 index rising as far as 4,010.3 in early trade.
Mazda Motor Corp surged 8.9% after the Nikkei business daily said Toyota Motor Corp planned to supply core components for hybrid vehicles to smaller rival Mazda. Toyota climbed 2.9%.
DOLLAR, EURO DRIFT VS YEN
Japanese manufacturer confidence improved for four months in a row as exports and industrial output picked up, a Reuters poll showed, but the mood among service sector firms sagged as domestic demand remained limp.
The dollar edged down 0.1% to ¥94.07, but remained broadly supported by the rise in US equities and growing confidence in the US economy. The US currency has rebounded against the yen after hitting a five-month low of ¥91.73 on trading platform EBS earlier this week.
Some traders said the news about CIT gave investors an excuse to take some profits on yen crosses.
The Australian dollar slipped 0.7% to ¥75.19 and the New Zealand dollar dipped 0.6 percent to ¥60.77.
“If share prices were to fall because of (CIT), we could see moves that are opposite from what occurred yesterday and see some buying back of the yen,” said Tohru Sasaki, chief foreign exchange strategist at JPMorgan Chase Bank in Tokyo.
“It is possible that financial markets could move a bit towards avoiding risk-taking,” he added.
Yields on US 10-year Treasury notes stood at 3.569%, down nearly four basis points from US trade but up from a two-month low of 3.26% hit on Monday.
September JGB futures fell 0.29 point to 138.35, sliding from a 3-1/2-mth peak of 138.97 hit last week.
Spot gold edged down slightly to 936.20 compared to New York’s notional close of $938.45. It jumped to a two-week high the previous day when US consumer prices data stoked fears of rising inflation.