Tuesday, June 2, 2009

Asian Stocks Rising, Australian GDP Beats Speculations

. Tuesday, June 2, 2009

By stockOzone team

Asian share markets were mostly higher Wednesday after a low-key night on Wall Street, with automotive stocks up a little in Tokyo but South Korean banks falling on capital-raising concerns.

Australia's S&P/ASX 200 was up 1.0%, after some encouraging first quarter gross domestic product data, with Japan's Nikkei 225 up 0.4% and Korea's Kospi Composite down 0.1%. Hong Kong's Hang Seng Index was up 2.1% after a 2.6% decline Tuesday, with the Shanghai Composite Index up 0.4% and New Zealand's NZX-50 0.5% higher.

Some analysts expected stocks to hold their ground in the near term, on a general resumption in risk appetite which has also pushed commodity prices and emerging market currencies higher. "The mood is good," said Hiroichi Nishi, general manager at Nikko Cordial Securities.

But U.S. stock futures were slightly lower in screen trade and others warned markets were starting to look overheated, and buyer fatigue may set in. The Nikkei, for example, had risen 4.2% over the five trading days to Tuesday, for a 9.5% gain year-to-date.

"We believe the recent stock rally has factored in the initial turnaround in global business activity. Sustainability of the rally will depend on the recovery in final demand," said UOB KayHian research head Nancy Wei.

On the slate later in the U.S. are April factory orders, the May ISM Non-Manufacturing Composite Index, and the ADP private payrolls report, with Federal Reserve chairman Ben Bernanke to testify before a U.S. House panel on the budget.

Among Japan's automakers, Toyota was up 0.3%, Honda up 0.9% and Nissan up 1.5%. The trio posted steeper declines in U.S. sales in May than most of their American counterparts, though most auto makers reported their highest sales of 2009. Also, Toyota was looking to add 65,000 vehicles this summer to its planned U.S. production schedule.

Resource stocks continued to rise with Nippon Mining up 2.2% in Japan, while in China, Zijin Mining Group was up 1.0% and Zhongjin Gold rose 3.6%.

But commodity plays were mixed in Sydney after a strong run. Alumina gained 4.9% after a 7.0% rise Tuesday in its joint venture partner Alcoa in the U.S., with Fortescue Metals up 6.8%, and Rio Tinto up 2.6%. But Lihir was flat, BHP was down 0.4% and Woodside slipped 0.1%.

Korean financial stocks were lower after a report in the Maeil Business Newspaper that KB Financial and Woori Finance Holdings were working on rights offers. A spokesman for KB Financial told Dow Jones the company was reviewing various options to raise capital, while a spokesman at Woori Finance said it didn't have plans to issue new shares to secure liquidity.

KB Financial was down 4.1% with Woori off 5.3%.

Taiwan's main index fell 0.6%. China Metals was limit-down by 7.0% and Prince Housing off 6.9% after prosecutors said they were probing the management of the two building companies on allegations of insider trading, having raided the offices of the companies on Tuesday.

But shipping shares were still cheering the recent gains in the Baltic Dry Index, with U-Ming Marine Transport up 2.0% and Sincere Navigation up 2.4%. The BDI, a measure of demand in the sector, breached the 4000 level Tuesday for the first time this year.

Energy stocks were rising in Hong Kong on the recent gains in crude oil, with CNOOC up 2.6%.

Singapore's Straits Times Index rose 1.1% while Malaysia's Kuala Lumpur Composite Index fell 0.1%. Philippine shares fell 0.7% and Indonesian shares were down 0.05%.

The U.S. dollar was at Y95.65, from Y95.53. "The U.S. dollar is trading lower (of late) on debasement concerns. Long-term concerns are driving dollar weakness and hence near-term data points are unlikely to challenge current trends," said analysts at UBS.

The Australian dollar was supported by the GDP data, showing growth of 0.4% from the fourth quarter 2008 and 0.4% from the year-earlier period, beating expectations. Recently it was at US$0.8234 after touching US$0.8246, an eight-month high.

Still, "the odds are we're going to see bigger declines (in the economy) going forward, particularly as some of the lower coal and iron ore contract prices kick in," said Su-Lin Ong, senior economist at RBC Capital Markets.

Treasury Secretary Ken Henry, Australia's top public servant, also told lawmakers a higher high currency, if it were to continue, implied "some downside risk" to future forecasts, especially for net exports.

Asian currencies were finding buyers with the U.S. dollar at KRW1,233.1, from KRW1,239.2 Tuesday, at MYR3.4850 against the Malaysian ringgit, from MYR3.4870 on Tuesday, and at S$1.4389 against the Singapore dollar, from S$1.4430.

Japanese government bonds were higher, with futures up 0.09 at 135.39 points.

Spot gold was up $1.30 from New York, at $984.50 a troy ounce with sentiment good for the metal on the still-weak U.S. dollar, said HSBC analyst James Steel. LME three-month copper was quoted $20 higher from London, at $5,050 a metric ton.

July Nymex crude oil futures were down 12 cents on Globex at $68.43 a barrel, after slipping three cents in New York.

Disclosure: Author does not own any of the stocks discussed here.





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