Asia Pacific stocks were mostly higher on Tuesday, August 07, 2012, as participants continued betting on cyclical assets on ongoing sentiment that central banks around the world will likely stimulate their economies with monetary easing tools.
Demand for risky assets underpinned on growing optimism that the European Central Bank would take measures to ease the euro area's debt crisis. Adding to bulls, Germany gave its backing to a plan that would allow the European Central Bank to buy sovereign bonds, a move that would bring borrowing costs down in countries like Spain and Italy
Meanwhile market pundits are predicting that the Federal Reserve will jolt its economy via quantitative easing, under which the Fed buys bonds such as Treasury notes and mortgage-backed securities held by banks, pumping the economy full of liquidity to spur greater recovery.
Investor are hoping that China central bank would loosened quantitative measures further in second half of 2012 after weekend statement from the People's Bank of China that it would continue to strengthen the pre-emptive adjustment and fine-tuning of monetary policy in the second half of this year and boost its efforts in the development of real economy.
In Japan, Tokyo stocks ended higher, with the Nikkei Stock Average climbing 77.02 points, or 0.88%, to 8,803.31. The benchmark index closed above 8,800 for the first time since July 11. A lack of incentives in early morning trade briefly pushed the index lower, but the Nikkei average gradually made it into the plus column, with speculative buying by some short-term players boosting the overall market.
A computer glitch that halted the Tokyo Stock Exchange's derivatives trading in the morning made the market somewhat less volatile. The Tokyo Stock Exchange suspended trading for all derivatives at 9:20 a.m. due to a system failure. It resumed trading of Topix-linked futures, Japanese government bond futures and other derivatives at 10:55 a.m.
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Power companies had wonderful day today, with Chubu Electric Power surging 10% at 646 yen, while Kansai Electric Power gained 9.2% at 646 yen. Steelmakers also ended higher, boosted by technical indicators that signaled chart bullishness. JFE Holdings closed up 4.9% at 1,044 yen, while Nippon Steel added 5.2% at 161 yen.
Nippon Telegraph & Telephone Corp. rose 1.4% to 3,755 yen after the telecom major posted a mild 2% year-on-year gain in April-June profit.
Tokai Carbon slumped 18.1% to 262 yen after the rubber company cut its full-year earnings guidance, citing a slowdown in Europe and China,
HOYA Corp sagged 3.7% to 1,705 yen after the optical glasses company posted weak quarterly results. HOYA said its revenues decreased 0.6% to 92,615 million yen for the first quarter ended June 30, 2012, as compared with the same period last year. Profit before tax increased 47% to 25,816 million yen, and profit for the term increased 51% to 23,197 million yen.
In Australia, Sydney stocks hit a fresh three-month high today as a further stabilization of the European debt crisis supported resource and financial stocks. Trading volumes remained thin however, on the back of yesterday's Bank Holiday in NSW and the ACT, and with many traders attending the annual Diggers & Dealers mining conference in Western Australia. The All Ordinaries Index rose by 18.5 points or 0.4% to finish the day's trade at 4311.4.
The Reserve Bank of Australia today left the official cash rate at 3.5% for the second month in a row.
On the market, energy and mining sectors rose by almost 1% each thanks to firm base metals trade in London. BHP Billiton (BHP) added 0.5% to A$32.16 while Rio Tinto (RIO) was up 1.3% to A$54.85 and Fortescue Metals Group (FMG) added 3.3% to A$4.40.
August 2012 reporting season officially kicked off today in the Australia, with Cohclear (COH), Transurban (TCL), Leighton Holdings (LEI) and Bradken Limited (BKN) amongst those reporting results. Bionic ear maker Cochlear Limited (COH) reported a huge drop in annual earnings, due to costs associated with a product recall in September. Net profit after tax including the A$101.3 million recall cost, came in at A$56.8 million for the 12 months to June 2012, down 68% from earnings of A$180.1 million in the previous financial year.
Toll road operator Transurban Group (TCL) halved its annual earnings, due to a write-down on one of its motorways in the US. Net profit for the 12 months to June 30 came in at A$58.6 million, down 50.4% on the 2011 result.
Construction giant Leighton Holdings Limited (LEI) today reported a 1H net profit after tax for the six months to June 2012 of A$115M, and reaffirmed it expects Full Year earnings between A$400-450M, excluding the capital gain on the July sale of its Thiess Waste Management services.
In China, Shanghai shares produced a third-straight gain to close at their highest in more than two weeks on Tuesday, as strength in the resources sector outweighed weakness in insurers after China Life Insurance issued a profit warning. The Shanghai Composite Index ended up 0.1% at 2,157.6, the highest close since July 20.
Shares in materials and resources companies continued northward move in the Mainland market, boosted by surge in base metals prices in the international markets and renewed optimism of fine-tuning of monetary policies. Aluminum Corp. of China gained 1.3% to 6.13 yuan, Jiangxi Copper Co 0.3% to 21.57 yuan, and Zhuzhou Smelter Group Co 0.5% to 8.19 yuan. Inner Mongolia Baotou Steel Rare-earth (Group) Hi-tech Co increased 3% to 42.72 yuan.
In India, a bout of volatility was witnessed as key benchmark indices trimmed gains after hitting their highest level in 18 weeks in late trade. The barometer index, BSE Sensex, was provisionally up 177.99 points or 1.02%, off about 50 points from the day's high and up close to 175 points from the day's low. Comments from Union Finance Minister P Chidambaram on Monday, 6 August 2012, that he intends to shortly unveil a path of fiscal consolidation aided gains on the domestic bourses. The market breadth was positive. Provisional data showing continuation of buying of Indian stocks by foreign funds on Monday, 6 August 2012, underpinned sentiment.
Index heavyweight Reliance Industries (RIL) edged lower in volatile trade after Oil Minister Jaipal Reddy said the government may approve RIL's new investment plan for the D6 block in the eastern offshore Krishna-Godavari basin as the country continues to face an acute shortage of natural gas. Index heavyweight and cigarette maker ITC edged higher. Education stocks rose across the board. IT stocks rose after New Jersey-based Cognizant Technology Solutions Corp stood by its full-year revenue forecast at the time of announcement its second quarter results. Telecom stocks were mixed. SpiceJet hit a 52-week high whereas Kingfisher Airlines hit lifetime low. DLF jumped after strong sequential growth in bottom line in Q1 June 2012.
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