Asia stocks, currencies rise on risk appetite

Asia stocks, currencies rise on risk appetite

Hong Kong: Asian stocks rose on Tuesday after US equities hit a 13-month high, while central banks intervened to curb Asian currencies as funds flowed into riskier assets on expectations economic stimulus measures will continue.

Markets were buoyed by a 2 % jump in the Dow Jones on Monday. Analysts said investors were encouraged by G-20 finance ministers’ pledge at the weekend to keep emergency measures in place until a recovery was assured, raising expectations for prolonged low interest rates.

“Investors had been worried about talk of early exit strategies. The concern has been removed, although uncertainties linger over the still slow economic recovery and fourth-quarter corporate earnings," said Chung Myoung-ji, an analyst at Samsung Securities in South Korea, where shares were up 1 %.

Japan’s Nikkei index was 1.6 % higher.

Japanese government bond futures meanwhile rose after finance minister Hirohisa Fujii said he was worried about the rise in long-term rates and that it was important not to lose trust in the bond market.

The yield curve for government bonds has steepened over the past month on renewed concerns about possible increases in debt issuance later this fiscal year and worries about the size of JGB issuance in fiscal 2010/2011, which starts next April.

The MSCI index of Asia Pacific stocks traded outside Japan was 0.7 % higher while the Thomson Reuters index of regional shares was flat.

Tech shares got a boost after Wells Fargo raised its 2010 growth projection for chipmakers and the PHLX semiconductor index surged 3 %. South Korea’s Samsung Electronics, the world’s largest memory chip maker, rose 1 %. Shares of Japan’s Toshiba Corp were up 2 % in Tokyo after the company made a solo bid for French nuclear reactor builder Areva’s transmission and distribution business.

The dollar was flat against a basket of major currencies, after hitting a 15-month low overnight, but lost ground early on to Asian currencies on rising risk appetite.

Central banks, including in South Korea, the Philippines and Thailand were spotted stepping in to rein in currency appreciation, traders said.

President Barack Obama, in an interview with Reuters, said he plans to raise the issue of China’s yuan currency during a trip to China next week.

“Currency, along with a host of other issues, will come up, and I’m confident that both the United States and China can arrive at a broad set of policies that encourages trade that benefits both countries, that allows ongoing economic growth," Obama said.

The yuan has consistently been a focus in US-China trade disputes, with US critics saying China keeps its currency undervalued to gain an advantage. China says its stable exchange rates helps its exporters and promotes global economic stability.

Overnight gains in metal and oil prices pushed up mining shares in Australia, where the benchmark share index was up 1 %. Mining giants BHP Billiton Ltd and Rio Tinto Ltd rose around 2 %.

The oil price retreated 0.4 % to $79.08 a barrel after rallying $2 in overnight trade after a tropical storm shut 30 % of US offshore production and more than a quarter of its natural gas output.

Gold held above $1,100 an ounce, pausing after hitting a record $1,110.85 on Monday.