Investor risk appetite boosted on gaining confidence over US economy after the release of strong US consumer sentiment data. US consumer confidence had risen for the third month in a row, hitting its highest level in almost seven years. The consumer confidence index rose to 90.9 in July, up from 86.4 in June and much stronger than the 85.6% reading analysts expected.
FOMC announcement will be the main focus today too. Fed is expected to taper the asset by another $10 billion, leaving the program at $25 billion per month. As usual, the reduction should be split evenly between treasuries and MBS. Overall, Fed is on track to end the QE3 by the end of October. FOMC should maintain the forward guidance that rates will stay low for a period of time. But the focus is on whether FOMC members are convinced that the economy is already in sustainable recovery. Also, Fed's view on whether inflation is still expected to run below the target would be watched.
Among Asian bourses
Australia stocks rise to fresh six-year high
Australian stock market advanced for second consecutive day, closing near six -year high. Investor appetite for risk assets drew encouragement on growing bets over the world's second-largest economic recovery and amid solid expectations for next month's domestic company reporting season. Almost all ASX sectors closed higher, with shares in utilities, industrials, realty, consumer staples, healthcare and, finance and property trusts companies being the biggest gainers. The benchmark S&P/ASX 200 Index rose 34.50 points, or 0.62% to 5622.90. The ASX 200 last reached 5600 points in June 2008. The S&P/ASX 200 was up 4.2% for the month.
Woolworths climbed 1.6% to A$36.79 amid reports it had secured the Woolworths Money trademark. Wesfarmers, owner of Coles, which is also pushing into retail financial services, added 0.2% to A$43.65.
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QBE Insurance jumped 4.5% to A$11.04 after falling 11% the day before. Genworth Mortgage Insurance surged 9.8% on strong first-half earnings and a solid full-year outlook due to a strong domestic housing market.
Rio Tinto added 0.5% to $66.07 and Fortescue Metals Group gained 2.1% to A$4.96 as the spot price for iron ore, delivered in China, jumped 1.1% to $US95.30 a tonne. Resources giant BHP Billiton fell 0.2% to A$39.
Nikkei closes at six-month high
Key benchmark indices of the Japan share market advanced to highest level in six-months, amid more signs the US economy improvement and yen depreciation against greenback. Meanwhile, good earnings from blue chips for the April-June quarter also pushed share prices higher. The benchmark Nikkei 225 index added 0.18%, or 28.16 points, to 15646.23, its best finish since 23 January 2014. The Topix index of all first-section issues rose 0.14%, or 1.83 points, to 1,292.24.
A solid US consumer confidence report helped the US dollar make some sizeable moves against the rest of the majors. The US dollar was also appreciated as traders positioned themselves for what is expected to be an improvement in the June quarter gross domestic product (GDP) figures to be released on Wednesday.
Honda Motor Co. rose 3.1% to 3658 yen after the company lifted its full-year sales and profit forecasts for the fiscal year ended in March 2015. The carmaker said yesterday that its net income grew 20% to 146.5 billion yen from a year earlier in the April-June quarter. Net income will probably climb 4.5% to 600 billion yen in the year ending March 31, Honda said.
Mitsubishi Electric Corp. advanced 3.4% to 1404 yen after announcing its net profit rose 69% to 43 billion yen for April-June quarter. The Company raised its full-year operating profit forecast to 260 billion yen from 250 billion yen.
Kao Corp. gained 3.6% to 4330 yen after the company said its net profit grew 73% to 32 billion yen for January-June half-year.
Hitachi Construction Machinery Co. lost 3.2% to 2090 yen after the company cut its group net profit forecast to 30 billion yen from a previous forecast of 45 billion yen for the fiscal year ending in March 2015.
Central Japan Railway Co. fell 3.1% to 14950 yen after the company said its group net profit fell slightly to 83.4 billion yen for the April-June quarter.
Nomura Holdings Inc. declined 1.4% to 657 yen after the firm reported a 70% drop in net profit to 19.9 billion yen in the April-June quarter from a year earlier.
Skymark Airlines Inc. fell 14% to 216 yen amid uncertainty over the cost related to cancelling Airbus jet orders. The low-cost carrier fell 13% on Tuesday when news of the cancellation broke.
China stocks fall for the first time in seven days
Mainland China share market declined, snapping six days long winning streak, as market participants withdrew some profit off the table amid concerns recent gain were excessive on comparing valuations and earnings prospects. The benchmark Shanghai Composite dropped 1.95 points to close at 2181.24, after hitting an intraday peak of 2194.57, the highest level since 13 December 2013. Turnover declined to 149.57 billion yuan from yesterday's 159.28 billion yuan.
The Shanghai index is headed for 6.5% gain in July. The gain was largely supported by optimism over the world's second-largest economy, thanks to better-than-expected China July HSBC flash manufacturing index, lower financing costs, loosening curbs on property policies, 18% surge in industrial profits in June and the coming investment connection between the Shanghai and Hong Kong stock markets were cited as factors behind the rally.
Chinese energy stocks surged after Citic Securities Co. recommended in latest report to buy the energy shares, citing valuation recovery as a probe into Zhou Yongkang, a powerful Politburo Standing Committee member who is affiliated with oil giant CNPC, signals an anti-graft campaign is coming to an end. PetroChina Co., the nation's biggest oil producer, rose 3.1%. China Petroleum & Chemical Corp. (386), the largest refiner, climbed 1.2%.
Property developers stocks declined on profit booking following solid gain in recent sessions. Poly Real Estate, the second-biggest developer, slumped 5.5%. China Vanke Co., the largest, retreated 3.7%.
Hang Seng climbs 0.37%
Hong Kong share market advanced for seventh straight session, closing at highest level in more than three years, on optimism over top two economies of the world. The benchmark Hang Seng Index climbed up 91.68 points, or 0.37%, to 24732.21, the highest close since 8 November 2010, when it finished at 24964.37. Turnover increased to HK$100.13 billion from yesterday's HK$88.66 billion.
The index is headed for a 6.7% jump this month. The market gain was supported by the inflow of funds into Hong Kong. H-shares entered a so-called bull market this week, rising at least 20% from a March low, after China cut reserve requirements for some banks and loosened property curbs to support growth.
Shares of property developers extended yesterday's rally despite the Urban Renewal Authority decided to withhold the decision to award the tender for the Kwun Tong Town Centre Project. Hang Lung Properties (00101) ascended 3.4% to HK$24.45. SHKP (00016) jumped 3.2% to HK$115.9. Sino Land (00083) edged up 0.9% to HK$13.52. New World Dev (00017) and Henderson Land (00012) gained 1.7% to HK$9.7 and HK$48.8. Cheung Kong (00001) added 2.2% to HK$150.4. Hutchison Whampoa (00013) edged up 0.2% to HK$106.9.
Oil counters were up after Citic Securities Co. recommendation, citing valuation recovery. PetroChina (00857) was flat at HK$10.44. Kunlun Energy (00135) added 1.5% to HK$13.46. Anton Oilfield (03337) shot up 4.8% to HK$4.51.
Sensex ends higher
Indian stock market closed higher in volatile trade, thanks to gain in pharma, banking and auto stocks. The S&P BSE Sensex was up 96.19 points or 0.37% to 26,087.42, its highest closing level since 25 July 2014. The CNX Nifty was up 42.70 points or 0.55% to 7,791.40, its highest closing level since 24 July 2014.
Pharma stocks were in demand. Cipla (up 1.53%), Sun Pharmaceutical Industries (up 0.05%) and Wockhardt (up 0.56%) gained. Dr Reddy's Laboratories gained 1.92% to Rs 2,819.80 on strong Q1 results. Lupin and Cadila Healthcare scaled record high after declaring strong Q1 results. Ranbaxy Laboratories hit 52-week high in volatile trade after the company reported improved Q1 result.
Bank stocks gained. Among private sector banks, ICICI Bank (up 2.65%), IndusInd Bank (up 2.23%), HDFC Bank (up 0.96%), Yes Bank (up 1.39%), Federal Bank (up 0.17%), Kotak Mahindra Bank (up 3.84%) and Axis Bank (up 1.72%), gained. Among PSU bank stocks, Canara Bank (up 0.74%), Union Bank of India (up 0.75%), Bank of Baroda (up 2.18%) and Punjab National Bank (up 4.17%) gained.
Most auto stocks gained ahead of the announcement of monthly sales volume data for July 2014 starting 1 August 2014. Mahindra & Mahindra (M&M) (up 1.45%), Maruti Suzuki India (up 2.02%), Ashok Leyland (up 6.41%), Hero MotoCorp (up 2.75%) and TVS Motor Company (up 0.75%) gained. Tata Motors (down 0.46%) and Bajaj Auto (down 0.02%) declined.
Elsewhere in the Asia Pacific region-- Malaysia's KLSE Composite was up 0.05% to 1878.34. South Korea's KOSPI index added 1% to 2082.61. Taiwan's Taiex index rose 0.59% to 9447.02. Bucking the trend, New Zealand's NZX50 fell 0.14% to 5158.55 and Singapore's Straits Times index fell 0.07% to 3353.65. Indonesia market closed for holiday.
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