Tokyo/Singapore: Asian shares rebounded from their biggest drop in a month after steady U.S. markets eased concern a slump in Chinese stocks would spark a global sell-off.
“The fact that stocks in New York managed to avoid a plunge allayed fears that we were headed for a rout,’’ said Mitsushige Akino, who oversees $468 million (Rs1,963 crore) in assets at Ichiyoshi Investment Management Co. in Tokyo.
BHP Billiton Ltd and Posco led gains among companies that rely on global demand. Canon Inc. and Toyota Motor Corp. led Japanese exporters higher after the yen weakened against the dollar, boosting the value of their overseas sales.
The Morgan Stanley Capital International Asia-Pacific Index climbed 0.2% to 147.27 as of 10:34 am in Tokyo. It yesterday dropped 1.6%, its biggest loss since 14 March. The measure is up 0.7% this week, set for a third straight weekly advance, and closed at a record on 18 April.
Japan’s Nikkei 225 Stock Average rose 0.6% to 17,480.88, while the broader Topix index added 0.2%. Gains were limited after Merrill Lynch & Co. cut its recommendation on Mitsubishi Corp. and Itochu Corp., two of the nation’s four largest trading companies.
Benchmarks also rose elsewhere in the region. China’s CSI 300 Index rose 2%, after yesterday sliding 4.7% ahead of reports showing faster-than-expected economic growth and inflation. Speculation growth and inflation would exceed forecasts fanned concern interest rates will be raised in the region’s second-largest economy.
In the U.S., the Dow Jones Industrial Average added 4.79 to 12,808.63, extending a record, after Merck Co. forecast profit that may beat analyst estimates.
BHP Billiton, the world’s largest mining company, rose 0.6% to A$29.81. Posco, the world’s fourth-largest steelmaker, gained 1.9% to 373,000 won. Baoshan Iron & Steel Co., China’s biggest steelmaker, added 1.7% to 10.52 yuan.
“I’m not anticipating a wholesale rout in equity markets because the fundamental economics in Asia, and worldwide, are still pretty supportive,’’ said Troy Angus, who helps manage the equivalent of $2.1 billion at Paradice Investment Management Ltd in Sydney. “Unless there’s significant tightening in the region, markets should hold up.’’
China’s gross domestic product rose 11.1% from a year earlier in the first quarter, exceeding the 10.4% growth forecast by economists in a Bloomberg News survey. Inflation last month accelerated to 3.3%, the fastest pace in more than two years, and breached the central bank’s 3% target. Premier Wen Jiabao said the government will take steps to rein in lending and investment.
The slump in the Chinese benchmark yesterday was the biggest fall since 27 February, when it plunged 9.2% and sparked a global equities sell-off that wiped out $3.3 trillion of market value.
“The drop in China made investors worried about a possible slump in the global markets,’’ said Yasuhiko Kuramochi at Shinko Research Institute in Tokyo. “What’s different from February’s slump is that we had a calm reaction in the currency and U.S. markets.’’
The dollar strengthened to 118.46 against the yen in New York from 117.93 in late Tokyo yesterday. The euro advanced to 161.27 against the Japanese currency from 160.17.
A weaker yen increases the value of Japanese exporters’ sales when converted back into local currency and makes their products more competitive overseas.
Toyota, Japan’s largest automaker, advanced 1% to 7,360 yen. Canon, the world’s biggest digital camera maker, added 1.7% to 6,620 yen. Canon and Toyota also gained after the Nikkei newspaper said the two companies will report a record profit for the year ended 31 March.
Mitsubishi Corp., Japan’s largest trading house, fell 1.5% to 2,615 yen, while Itochu, the nation’s fourth biggest, dropped 2% to 1,178 yen.
Matt Aizawa, a Tokyo-based analyst at Merrill Lynch, cut his ratings to “neutral’’ from “buy’’ on the view slowing growth will make it difficult for the stocks to rise further.