The regional market shares followed positive finish of Wall Street on Friday's at the start of trade. Risk appetite was underpinned after the Dow and S&P 500 both closed at new highs on Friday. The Dow rose 18.43 points, or 0.1%, to close at 16,717.17 on Friday, less than two points above its previous record high set on May 13. The S&P 500 index rose 3.54 points, or 0.2%, to 1,923.57, also closing at a record.
Stocks got an additional boost from upbeat China manufacturing data. A gauge of China's factory activity expanded at the fastest pace in five months in May due to rising new orders, official data showed on Sunday, reinforcing views that the world's second-largest economy is regaining momentum in the second quarter following Beijing's targeted measures to bolster growth
The official manufacturing Purchasing Managers' Index rose to 50.8 in May from 50.4 in April, the National Bureau of Statistics and China Federation of Logistics and Purchasing said on Sunday. Readings above 50 indicate expansion in manufacturing.
A sub-index for new orders, a measure of foreign and domestic demand edged up to 52.3 in May from 51.2 in April, marking the highest level since last November. The PMI data also showed export orders inched higher to 49.3 in May from 49.1 in April, though the indicator remained below the 50-level threshold that separates growth from contraction.
All eyes now will be on the release of the final HSBC PMI on Tuesday, which favours smaller and private companies compared with the bigger ones captured by the official PMI.
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The Chinese central government appears to be taking no chances on a more pronounced downturn. Beijing has rolled out a steady stream of targeted policies to bump up economic growth. Though it has avoided turning to a massive government spending program as used after the 2008 global financial crisis, it has pledged to make ample credit available to hard-pressed companies.
On Friday, Beijing said it would expand a previously announced program to reduce the percentage of deposits that certain banks need to hold in reserve, enabling them to lend more. It gave few details but said the lower reserve requirements would apply to rural lending and loans to small businesses. Major banks are supposed to keep 20% of their deposits on reserve with the central bank.
Beijing also vowed to cut government fees and promised to send teams to inspect the implementation of its instructions. That followed a directive issued last week to local governments to speed up spending of allocated funds and it came shortly after the central bank urged commercial banks to make funds available for mortgage lending. These moves suggest a sense of increased urgency in supporting the economy.
Among Asian bourses, Japanese share market finished the session at highest level in eight weeks today, as the yen depreciation in currency trading, better than expected capital spending data for March quarter and upbeat China manufacturing data boosted investor sentiment. The benchmark Nikkei 225 index added 2.07% to finish at 14935.92, while the Topix index of all first-section shares climbed 1.59% to 1220.47.
The Finance Ministry said on Monday that Capital spending by Japanese companies jumped 7.4% from a year earlier in the January-March period, marking the sharpest rise in nearly two years, as the corporate sector beefed up investment ahead of the first consumption tax hike in 17 years. Monday's reading showed capital spending by manufacturers increased for the second straight quarter, up 6.8% on year to 4.11 trillion yen, and non-manufacturers posted a 7.7% rise to 8.12 trillion yen, up for the fourth consecutive quarter.
Dai-ichi Life fell 4.2% to 1,445 yen on reports the Company is on final talks on price and terms to buy Protective Life may lead to a deal within days that ranks as the biggest takeover of an overseas firm by a Japanese life insurer.
In Australia, Australian share market advanced for the first time in three consecutive sessions today, lifted by promising Chinese data and a better end to the week across U.S. markets. Most of the sectors finished higher, with banks & financials, property trusts, and realty developers stocks leading gains and helped to offset losses in materials & resources stocks. The benchmark S&P/ASX200 and the broader All Ordinaries each rose by 0.5% to 5518.50 and 5499.20, respectively.
But gain on the Sydney was capped after Australian Industry Group's performance of manufacturing index (PMI) data indicated that Australian manufacturing activity improved 4.4 points to 49.2 in May, just below the 50 level that is supposed to mark the threshold between contraction and expansion. The survey has been persistently weaker than official measures of manufacturing, implying the sector has been deep in recession for almost all of the past five years. The may result marked the seventh consecutive month of contraction.
Shares of lenders and property developers closed higher, despite of Australian Bureau of Statistics data showing number of dwellings approved fell 1.6% in April 2014, in trend terms, and has fallen for four months. The value of total building approved fell 5.6% in April, in trend terms, and has fallen for five months. The value of residential building fell 1.8%, while non-residential building fell 12.8% in trend terms.
Among major lenders, Commonwealth Bank of Australia rose 0.8% to A$82.26, Westpac Banking Corp 0.5% to A$34.60, ANZ Banking Group 0.7% to A$33.71 and National Australia Bank 1.2% to A$33.88. Among developer stocks, stocksland grew by 1.3% to A$3.95, GPT Group 0.5% to A$3.92, Mirvac 0.3% to A$1.815 and Dexus 2.2% to A$1.14.
Shares of material and resource companies fell down, due to continued weakness in the iron ore price. The spot price for iron ore, landed in China, was down 4.1% over the weekend to a 20-month low of $US91.80 a tonne. Resources giant BHP Billiton dropped 1.1% to A$36.59, while main rival Rio Tinto shed 0.1% to a near nine-month low of A$59.23. However, Fortescue Metals Group added 1.8% to A$4.49.
Origin Energy dropped 3.6% to A$14.55 as it flagged a A$1 billion equity raising later this year to fund a Browse Basin gas deal.
UGL jumped 8.2% to A$7.10 with private equity firm TPG poised to buy its property services unit DTZ for A$1.2 billion.
Karoon Gas soared 40% to A$3.45, the biggest gain in more than five years. Origin Energy, Australia's largest energy retailer, agreed to buy Karoon Gas's stake in the natural gas project off Western Australia for about A$800 million to tap exports to Asia.
In India, a bout of volatility was witnessed as key benchmark indices trimmed gains after hitting fresh intraday high in mid-afternoon. Indian stocks edged higher today after a manufacturing sector survey showed that production volumes at Indian manufacturers continued to rise in the month just gone by. The market sentiment was boosted by data showing that foreign funds made heavy purchases of Indian stocks on Friday, 30 May 2014. Gains in European and Asian stocks also boosted sentiment on the domestic bourses.
At 14:20 IST, the S&P BSE Sensex was up 379.08 points or 1.57% to 24,596.42. The index jumped 428.74 points at the day's high of 24,646.08 in afternoon trade. The CNX Nifty was up 114.15 points or 1.58% to 7,344.10.
IndusInd Bank rose 2.39%. The bank during market hours today, 2 June 2014, said it has launched a new customer-centric service titled Video Branch. This innovative offering (first-of-its-kind initiative in the banking industry) enables the customers to do a video conference with the bank staff in order to avail various services offered by bank.
Coal India gained 1.05%. The company said during market hours today, 2 June 2014, that the coal production of the company and its subsidiaries was 94% of the targeted production at 36.27 million tonnes in May 2014. The coal offtake of the company and its subsidiaries was 93% of targeted offtake at 40.71 million tonnes in May 2104.
Easun Reyrolle lost 5% after the company reported a net loss of Rs 16.08 crore in Q4 March 2014 as against net profit of Rs 12.46 crore in Q4 March 2013. The result was announced on Saturday, 31 May 2014. Easun Reyrolle's total income from operations declined 36.28% to Rs 36.83 crore in Q4 March 2014 over Q4 March 2013.
Shalimar Paints tumbled 7.52% after the company reported a consolidated net loss of Rs 10.29 crore in Q4 March 2014 as against net profit of Rs 0.37 crore in Q4 March 2013. The Q4 result was announced after market hours on Friday, 30 May 2014. Shalimar Paints' total income from operations declined 8.77% to Rs 128.23 crore in Q4 March 2014 over Q4 March 2013.
Elsewhere in the Asia Pacific region, Malaysia's KLSE Composite sank 0.5%. Indonesia's index Jakarta Composite index rose 0.2%. South Korea's KOSPI index was up 0.4%. Singapore's Straits Times index added 0.1%. Markets in China, Hong Kong, Taiwan and New Zealand closed today for holidays.
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