Headline indices of the Asia Pacific market advanced on Thursday, April 25, 2013, as recent glum data from both side of the Atlantic reinforced expectations of central bank action to shore up the global economic recovery. The MSCI Asia Pacific Index, a broad measure of stocks across the region, was up 0.5% at 140 in afternoon trade. The gauge is headed for its highest close since May 3, 2011.
Investors chased for value buying across the region on expectation that the European Central Bank will cut interest rates next week in wake of weaker-than-expected German and euro zone industrial production and service-sector output figures. The Ifo index of German business climate fell to a four-month low of 104.4 in April from 106.7 in March. Germany is the euro zone's largest economy and the week Ifo index reading prompted speculation that the European Central Bank could lower interest rates at its next monetary policy meeting on May 2.
ECB vice president Constancio said that the central bank is "ready to act if economic conditions continue to provide bad news, as unfortunately has been the case in recent data that became available". He noted that monetary policy will "continue to be accommodative to respond to the present conditions in which inflation is going down in a significant way.
Meanwhile weaker than expected durable goods orders also convinced investors that the Federal Reserve won't rush to dismantle stimulus programs such as its monthly $85 billion bond-buying program. In U.S. economic news, the Commerce Department said durable goods orders fell 5.7% last month following a 4.3% increase in February. Orders excluding non-defense aircraft rose 0.2%. Shipments of core capital goods rose 0.3% in March, but the February reading was revised lower to an increase of 1.2% from an initial reading of 1.9%.
Furthermore, investors also speculating that the Bank of Japan, which has launched massive monetary stimulus measures to kick-start recovery, has room to loosen policy even further. Market participants are expecting that the Japan central bank may upgrade its view on price gains excluding fresh food to at least 1.5% from 0.9% for fiscal 2014 in its next forecast update tomorrow. The Bank of Japan said early this month that it will double the amount of money circulating in the economy by the end of 2014 by buying government bonds, its boldest round of quantitative easing. The BOJ will convene tomorrow.
In the Asia Pacific market, the Tokyo market advanced to their highest in five years on Thursday, April 25, 2013, as investors continued hunting for high yielding assets ahead of BOJ convene tomorrow, ignoring weak earnings. The benchmark Nikkei 225 Stock Average climbed 0.6%, and the broader Topix Index added 0.7%
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and tablets, forecast growth in its telecommunications products as it benefits from surging sales of smartphones and tablets. Nippon Electric Glass, Japan's second-biggest glassmaker by market value, soared 7.1% to 525 yen. Asahi Glass Co., the largest, advanced 2.9% to 793 yen.
Nippon Electric Glass, Japan's second-biggest glassmaker by market value, jumped 7.1% to 525. U.S.-based Corning, a leading maker of glass for flat-panel televisions, phones and tablets, forecast growth in its telecommunications products as it benefits from surging sales of smartphones and tablets.
Canon dropped 6.4% to 3,595 yen after forecasting weaker than market expected net income of 290 billion yen ($2.9 billion) in 2013. Canon cut its sales target for compact cameras because consumers increasingly use smartphones to snap pictures.
Nintendo slumped 5.9% to 11,240 yen after the game maker reported its second straight operating loss as it sold .45 million of its Wii U game machines in the fiscal year ended March 31, below a 4 million-unit sales target it set in January and an initial projection of 5.5 million.
In South Korea, Seoul shares rallied, sending the Kospi Composite index 0.84% higher at 1951.60, after the Korea National Statistical Office said that South Korea's GDP growth rose 0.9% in the first quarter compared with 0.3% in the fourth quarter, the strongest pace since early 2011. On year on year basis, South Korean GDP remained unchanged at a seasonally adjusted annual rate of 1.5%, from 1.5% in the preceding month.
Earlier this month the BOK trimmed its GDP forecast for the year to 2.6% growth, from an earlier projection of 2.8%. The BOK's Kim had predicted first-quarter growth at 0.8%. Thursday's data beat both market expectations and the central bank's own estimate. Thursday's data showed exports rose 3.2% on-quarter in the first quarter, swinging from a 1.1% decline in the last quarter of 2012. The BOK attributed that to brisk shipments of petrochemical products and telecommunications equipment. Facility investment rose 3% from the previous quarter but fell 11.5% from a year earlier, indicating that companies are reluctant to spend on plant expansion. Private spending, which accounts for almost half of GDP, fell 0.3% after rising 0.8% in the preceding quarter.
In China, the mainland share market closed volatile session modest lower on Thursday, April 25, 2013, as massive fall in realty and cement stocks overwhelmed gains in medical equipment and tourism-related stocks. Investor sentiment swings between concern over a fragile economic recovery and hope for more policy stimulus. The benchmark Shanghai Composite ended the day 19.01 points, or 0.86% down at 2199.31, The benchmark Index was up 3.79 points, or 0.17%, at 2,222.11 in the morning session.
Chinese property and construction-related shares were major drag on the Shanghai bourse after an investment blue book released yesterday by the state-owned China Jianyin Investment Securities Co and Social Sciences Academic Press said the government is likely to rein in credit supply to property developers. Property giant China Vanke Co lost 2.8% to 10.98 yuan in Shenzhen trading. Real-estate major Gemdale Corp dropped 3.1% to 6.89 yuan. Among cement makers, Anhui Conch Cement Co, China's biggest cement producer, sank 3.8% to 17.62 yuan. Huaxin Cement Co skid 5.6% to 14.11 yuan, Gansu Qilianshan Cement Group Co 5.1% to 10.51 yuan.
In The Hong Kong, city shares closed sharp higher, as investors chased for value buying across the board after weak set of economic data from both side of the Atlantic reinforced hopes that the ECB will cut interest rates next week while the Federal Reserve won't rush to dismantle stimulus programs. The benchmark Hang Seng Index added 218.19 points, or 0.98%, to finish at 22,401.24 on turnover of around HK$62.8 billion. Gains in Hong Kong were led by the energy sector, with PetroChina Co rose 1.4% to HK$9.69 and Sinopec 2% to HK$8.53, aided by higher oil prices and after Beijing lowered the administered prices of gasoline and diesel in China with effect from Thursday.
In India, key indices on the Indian market rose for fourth straight day, led by commodity plays and rate sensitives. The BSE Sensex provisionally closed at 19,397.67, up 218 points, or 1.1%, a level last seen on March 15. Jet Airways Ltd shares closed 10% up after its deal with Etihad, after having risen nearly 20% earlier.
Elsewhere, Singapore's Straits Times Index added 0.45%. Malaysia's KLSE Composite edged 0.06% lower. Indonesia's Jakarta Composite shed 0.34%. Taiwan's Taiex index was little 0.02% lower. Australian and New Zealand bourses are closed today for public holidays.
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