US share market rallied on Tuesday, with the Dow Jones ending the day at new all-time highs on renewed optimism after the National Federation of Independent Business stated a slight improvement in confidence among small business owners in the U.S. in April. And a prominent hedge fund manager statement that the stock rally of 2013 still has more room to go.
Meanwhile sentiments for risk also received support from the Greece's sovereign ratings upgrade from Fitch Ratings. Fitch raised Greece's currency ratings to B-minus from triple-C, with stable outlook. The stable outlook reflects Fitch's view that upside and downside risks to the rating are more balanced than during the recent past. Fitch rating upgrade reflects a rebalancing of the country's economy, as sovereign debt relief and an easing of fiscal targets have lifted a measure of economic sentiment to a three-year high and the risk of the country exiting the euro zone has eased. Standard & Poor's in December raised its rating on Greece to B-minus from selective default, amid a strong and clear commitment from members of the euro zone to keep Greece in the common currency bloc. It was the highest rating S&P has given Greece since June 2011.
However, gains on the upside were largely capped due to lower-than-expected Euro-zone first quarter growth figures and ahead of a raft of economic data and earnings reports in the US. The German economy narrowly avoided recession in the first quarter of 2013, with 0.1% growth for the quarter, while the French economy contracted for the second consecutive quarter, data showed. Meanwhile The ZEW economic sentiment indicator, a gauge of investor confidence, released yesterday showed it was inched 0.1 point higher to 36.4 in May, but remained well below the result of 40 expected by analysts. Industrial production in the euro zone climbed 1% in March compared with February. Analysts expected a rise around 0.4%.
In the Asia Pacific region, the Japan's shares skyrocketed, buoying the Nikkei Stock Average 337.61 points higher to end the day at 15,096.03, registering a first closing above 15,000 since Dec. 28, 2007. Gains were underpinned primarily on tracking an overnight gains on Wall Street and the dollar's rise to the lower-102 yen level. US market surged on Tuesday as bullish remarks from a prominent hedge-fund manager. David Tepper, who runs Appaloosa Management LP, said he was "definitely bullish" on the market, citing improvements in the housing and auto markets.
The Japanese yen was trading at 102.46 per dollar, the lowest since October 2008 after economic policymakers from the Group of Seven industrialized economies concluded a meeting by refraining from criticizing Japan over policies that have pushed the yen down. Wealthy G7 nations concluded at a U.K. summit over the weekend that such policies are designed to spur growth in Japan and are not out to give the Asian economy unfair advantages in global trade arenas. The yen fell 18% against the dollar this year through yesterday as the Bank of Japan introduced unprecedented monetary easing and the U.S. economy showed recovery signs. A weaker yen enhances overseas earnings at Japanese exporters when repatriated.
Sony Corp spurted 10% to 2,072 yen on tracking sharp rally of its ADR overnight. The company's shares rose 9.9% in New York following US hedge fund billionaire Daniel Loeb's proposal to sell off between 15% and 20% of the entertainment arm comprising Sony's movie and music businesses. Mr. Loeb's hedge fund Third Point owns a 6.5% stake in Sony. Sony responded in a statement that the entertainment businesses are not for sale, however.
Australian shares closed lower for the first time in six sessions, with the broader All Ordinaries index down by 0.56% to 5173.30, as investors offloaded some cash off the table following strong recent run.
Shares in mining companies in Sydney ended lower, following losses among prices for resources, with Newcrest Mining dropped 2.8% to A$15.88, BHP Billiton fell 1.9% to A$34.02, and FMG shed a whopping 3.5% to A$3.61. Rio Tinto dropped 3.2% to A$55.69 following a ratings downgrade by Barclays to equal weight from overweight.
Share price of UGL tanked 16.6% to A$7.98 after the engineering and mining contractor slashed its full-year profit guidance, blaming the slowdown in mining investment and poor project performance for its second downgrade this year. Underlining the pressure on contractors came as the big miners wind back on exploration and capital spend as record commodity prices wane. UGL said it now expects to report net profit of between A$90 million and A$100 million, compared to its previously revised guidance of between A$150 million and A$160 million given at its half-year results in February.
The Shanghai-exchange listed shares ended volatile but narrow trade broadly higher after swung between gain and losses, sending the benchmark Shanghai Composite index 0.35% up at 2224.80. Shares of Technology, telecom and healthcare companies advanced, while energy and material shares declined.
Despite a positive finish of the Shanghai bourses, appetite for risk assets remain muted amid concern a slowing economy after JPMorgan Chase & Co. cut its growth outlook for the nation's economy and concern grew the government is introducing more property restrictions to limit gains in housing prices. JPMorgan reduced its second-quarter growth forecast for the Chinese economy to 7.8% from 8% and the full-year estimate to 7.6% from 7.8%, citing weak domestic demand suggested by the April data including industrial output and fixed-asset investment. Sentiment for risk assets also hurt after Chinese Premier Li Keqiang indicated that the government is unlikely to roll out more stimulus measures to boost economy. "We must rely on market mechanism to achieve this year's development targets as there isn't much room for stimulus policies or government investment," Li told a nationwide teleconference on May 13. Li said the transformation of the government is urgently needed to maintain healthy development of the economy, stabilize growth, control inflation and prevent risks.
The Hong Kong shares rose, with the benchmark Hang Seng Index up by 113.96 points, or 0.5%, to 23,044.24, as investors seized on the latest encouraging news about the US economy and record high finish of Wall Street overnight.
Among the 50 HK blue chips, 31 rose and 15 fell, with 4 stocks remaining steady. Li & Fung soared 8.4% to HK$11.16 on media reports citing its chairman as saying this year's earnings will rebound to 2011 levels, while China Coal slid 5.6% to HK$5.22 on news of sharp decline in coal demand and a surge of importing coal stock in Guangxi Fangcheng port, making themselves the largest blue-chip gainer and loser. Esprit gained 5.8% to HK$11.28 after the investors day, where the CEO expects for recovery from 2015.
Indian share market surged today, led by interest rate sensitive stocks on rate cut hopes after WPI inflation fell to a three-year low of 4.69%, giving room for RBI to cut interest rates in its mid-quarter monetary policy review next month. The 30-share BSE index Sensex was up 490.67 points (2.5%) at 20,212.96.
Elsewhere, Indonesia's JKSE rose 0.2%, South Korea's KOSPI added 0.1%, Taiwan's Taiex added 0.8% and Singapore's STI rose 0.3%. New Zealand's NZX50 was flat. Malaysia's KLSE lost 0.3%.
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