Asian stocks jumped to a seven-month high on better-than-estimated US and Australian jobs reports and an assurance from US Treasury Secretary Timothy Geithner that none of the country’s biggest banks are insolvent.
Honda Motor Co, which gets 45 per cent of its sales in North America, climbed 6.8 per cent in Tokyo, where markets reopened after a three-day holiday. Mitsubishi UFJ Financial Group Inc, Japan’s largest listed lender, surged 16 per cent after Geithner said results of bank stress tests would reassure investors. BHP Billiton, the world’s largest mining company, gained 5.3 per cent as oil and copper prices surged.
“A lot of people that doubted the rally are becoming more positive on it,” said Scott Tully, a Sydney-based portfolio manager at Colonial First State Global Asset Management, which holds about $100 billion. “Does that make it sustainable? I don’t know. But it does mean people are becoming a bit less shell-shocked, even though they are still fairly fragile.”
The MSCI Asia Pacific Index gained 3 per cent to 97.10 as of 5:04 pm in Tokyo, set for the highest close since October 7. The gauge has rallied 38 per cent from a five-year low on March 9 on speculation the worst of the global financial crisis had passed.
The Nikkei 225 Stock Average climbed 4.6 per cent to 9,385.70 on Thursday after a holiday in which the Asian MSCI index that excludes Japan gained 6.6 per cent. Australia’s S&P/ASX 200 Index added 1.9 per cent as a statistics bureau report said employers unexpectedly added workers in April. All Asian markets rose except Malaysia and Pakistan.
Economic recovery?
Sompo Japan Insurance Inc surged 16 per cent in Tokyo trading after JPMorgan Chase & Co raised its recommendation. Korea Exchange Bank rose 11 per cent on speculation of a takeover. CSK Holdings Corp plunged 5.5 per cent in Tokyo as the computer- services company reported a wider-than-expected loss.
Futures on the US Standard & Poor’s 500 Index lost 0.04 per cent. The gauge climbed 1.7 per cent yesterday as investors speculated banks will need less capital than expected and ADP Employer Services said companies eliminated fewer jobs in April than the average economist estimate in a Bloomberg survey.
The yen fell against the dollar and the euro as demand for Japan’s currency as a refuge from the global financial crisis dropped. The yen weakened to 98.85 per dollar from 98.31 yesterday in New York. The currency fell to 131.55 per euro from 131.10 yesterday.
The results of the stress tests will be “reassuring,” Geithner said in an interview that’s scheduled to air on PBS. While some banks will need to raise more capital, there are a number of ways they can do that and most should be able to do so in the private sector, he said.
‘More confident’
Government reports last week showed consumer spending in the US grew at the fastest pace in two years during the first quarter while Japanese industrial output posted its first advance in six months in March. A Chinese purchasing managers’ index from CLSA Pacific Markets released on May 4 showed manufacturing expanded for the first time in nine months.
Honda climbed 6.8 per cent to 3,050 yen. Toyota Motor Corp, the world’s largest auto maker, gained 3.6 per cent to 4,040 yen. Canon Inc, the world’s largest camera maker, jumped 8.3 per cent to 3,390 yen.
“As various indicators improve, market players are getting more and more confident the global economy is bottoming out,” said Mitsushige Akino, who oversees about $615 million at Ichiyoshi Investment Management Co. in Tokyo. “Investors are more confident the US financial crisis will come to an end after the stress tests and subsequent capital injections.”
Banks advance
Financial companies accounted for 37 per cent of the MSCI Asia Pacific Index’s advance on Thursday. The shares are the worst performing of 10 industry groups in the past year as losses from the credit crisis swelled to more than $1.3 trillion.
Mitsubishi UFJ advanced 16 per cent to 617 yen. HSBC Holdings Plc, Europe’s biggest bank, gained 5.6 per cent to HK$65.05. Australia & New Zealand Banking Group, the nation’s fourth-largest lender, gained 2.8 per cent to A$16.63. Westpac Banking Corp, the biggest by market value, added 1.8 per cent to A$20.31.
BHP Billiton rose 5.3 per cent to A$35.69 after crude oil climbed 4.6 per cent to $56.34 a barrel in New York yesterday, the highest settlement since November 14, and copper futures jumped 5 per cent, the biggest gain since April 3. Rio Tinto Group, the world’s No 3 mining company, gained 2.8 per cent to A$71.04.
Brokerage upgrade
Sims Metal Management, the world’s biggest recycler of scrap metal, surged 8.6 per cent to A$22.78 in Sydney after saying it may return to profitability this quarter.
Sompo climbed 16 per cent to 665 yen after Natsumu Tsujino, an analyst at JPMorgan upgraded the stock to “overweight” from “neutral.” Korea Exchange Bank, controlled by US buyout firm Lone Star Funds, rose 11 per cent to 8,450 won in Seoul after Edaily reported Korea Development Bank is interested in taking over the lender.
CSK Holdings plunged 5.5 per cent to 495 yen after reporting a wider-than-expected loss in the year ended in March, for which it blamed inventory, tax and asset-sale charges. DeNA Co, a Japanese operator of auction and shopping Web sites, fell 6.3 per cent to 328,000 yen after saying profit growth will slow.
