The S&P500 closed at a record high on Friday, as stronger-than-expected earnings from Google, Morgan Stanley and others overshadowed worry that earnings growth was faltering. The reassuring signals on profitability augmented investors' relief over the resolution earlier in the week of the budget impasse in Washington that had threatened to trigger a potentially catastrophic default on the U.S. debt.
Meanwhile, buying momentum accelerated further on speculation about continual of the Federal Reserve massive stimulus measures to the US economy as the 16-days partial US government shutdown, which ended on last Thursday, expected to curb economic growth in the world's biggest economy. An initial estimate by S&P says that the shutdown has taken $24 billion out of the US economy and cut 0.6% off of yearly fourth quarter US GDP growth.
Also helping sentiment were comments from Federal Reserve officials that implied the central bank will maintain its current level of stimulus for the immediate future following a damaging political stand-off in Washington.
Fed Reserve Bank of Dallas President Richard Fisher said he would have a hard time arguing for us to dial it back this month. My personal opinion is that it's not in play. This is just too tender a moment. Chicago Federal Reserve President Charles Evans said the disruption from the government shutdown meant the Fed did not have enough information to taper. A majority of economists polled by Bloomberg now expect the taper to be postponed until March at the earliest.
However, gains on the regional market were limited as some market players were appeared cautious ahead of Tuesday's release of U.S. nonfarm payrolls report for September 2013. The data has been delayed due to the 16-day partial shutdown of the US government this month.
The Federal Open Market Committee (FOMC) holds a two-day policy meeting on 29-30 October 2013. On 18 September 2013, the Fed surprised economists and investors with its decision to delay scaling back its stimulus amid concerns about the strength of the economic recovery.
Among Asian bourses, Australian shares rallied today, sending the benchmark S&P/ASX200 index 30.30 points or 0.57% to 5351.80, a fresh five and a half year highs, with mining players were leading the way up.
Materials and resources blue chips climbed the most in the Sydney, with BHP Billiton rising 1.3% to A$36.20 ahead of its quarterly production report Tuesday. Rio Tinto added 0.5% to A$63.75 and Fortescue Metals Group rose 2.8% to A$5.45. Gold miner Newcrest Mining shares jumped 0.8% to A$10.76, despite a loss for gold at the end of last week.
Qantas Airways shares tanked 5.6% to A$1.35 after the company warned that a pick-up in business confidence has failed to translate into an increase in demand for flights, forcing it to predict that returns from fares will fall in the first half. The airline forecasted today that group yields or returns from fares would drop by between 2 and 3% in the first half of the new financial year. The airline declined to give earnings guidance for this year due to volatile conditions.
Shares in Wotif fell 0.6% to A$4.64 after the company said in its annual meeting that retail trading conditions in Australia and New Zealand remain soft, with the company yet to experience any increase in accommodation bookings despite a lift in consumer confidence. The online travel company said it would not provide investors with specific earnings guidance for the new financial year until February, when it releases its half-year results.
In Japan, shares in Tokyo were higher, as risk hungry investors piled into bargain hunting on the back of positive cues from Wall Street Friday (18 October 2013), depreciation in yen against the greenback and other major currencies and speculation the US Federal Reserve may have to delay scaling back its stimulus program. The benchmark Nikkei Stock Average advanced 0.91% to 14693.57 while the broader Topix index gained 0.57% to 1212.36.
Shares of Japanese blue-chip exporters advanced on earning optimism as the dollar moved back above the 98-yen level. Fujitsu rose 2.2% to 414 yen, Alps Electric Co added 2.4% to 829 yen. Shares of Suzuki Motor Corp climbed 3.1% to 2470 yen on reports the company would record its highest-ever operating profit for the April-September half.
Retailers were also had a strong spot today in Japan, with J. Front Retailing Co advanced 3.1% to 774 yen, online marketplace Rakuten Inc jumped 5.8% to 1340 yen, and 7-Eleven operator Seven & I Holdings Co rose 0.27% to 3720 yen.
The Ministry of Finance data showed on Monday that Japan's trade balance recorded another massive deficit in September, extending its run of shortfalls to a record 15th month. The monthly deficit came to Y932.1 billion, against a year-ago shortfall of Y568.2 billion. Exports rose 11.5% from the year ago, while imports grew 16.5%, according to the data.
In China, shares in the Chinese market skyrocketed, buoying the benchmark Shanghai Composite index higher by 1.62% to 2229.24, on hope of fresh measures from the government after comment from State Council on Sunday that it will continue to deepen economic reform and transform the economy. Also helping sentiment was stronger than expected domestic GDP data for September quarter.
Investment rationale in Mainland China continued for second session in row after the State Council said in a statement yesterday that the government will boost financial support to small businesses, cut overcapacity and look for new engines to drive consumption,. The nation's leaders will meet in November to map out policies to reform the economy and sustain long-term growth at about 7%.
Meanwhile, momentum got further strength from last Friday's figures that revealing the world's second largest economy continued to make headway in the third quarter. The Statistic department figures revealed on last Friday's that the gross domestic product (GDP) of China in the first three quarters of this year was 38,676.2 billion yuan, a year-on-year increase of 7.7%. Specifically, the year-on-year growth was 7.7% for the first quarter, 7.5% for the second quarter and 7.8% for the third quarter. The value added of the primary industry was 3,566.9 billion yuan, up by 3.4%; that of the secondary industry was 17,511.8 billion yuan, up by 7.8%; and that of the tertiary industry was 17,597.5 billion yuan, up by 8.4%. The gross domestic product of the third quarter of 2013 went up by 2.2% on a quarterly basis.
Shares of information technology issue was biggest winner in Shanghai, with China National Software & Service locked 10% upper circuit at 48.43 yuan, while Neusoft Corp rose 4.51% to 17.60 yuan. Shanghai Baosight Software Co. raised 10% daily limit at 33.18 yuan after signing a contract to provide data centre services to Alibaba Group Holding Ltd.
Shares of consumer related stocks bumped up, with Qingdao Haier Co, China's biggest refrigerator maker, locking 10% upper circuit at 16.73 yuan after the stock was rated buy in new coverage at UBS AG.
In Hong Kong, HK shares closed modest higher, with the benchmark Hang Seng index rising 0.42% to 23438.15, inspired both by gains on regional share markets today and hope of fresh measures from the Chinese government.
Shares of lenders were mostly higher in HK after Chinese central bank adviser said on Sunday that the People's Bank of China would likely keep its monetary policy unchanged in the current quarter. Among Hong Kong-traded financial stocks, Industrial & Commercial Bank of China rose 0.2% to HK$5.42, Bank of China rose 0.6% to HK$3.61 and China Everbright rose 0.19% to HK$10.68. HSBC inched up 0.2% to HK$85.05.
Shares of gaming companies also climbed up in HK, with Sands China rising 2.9% to HK$59.7. SJM rose 3.8% to HK$27.4. MGM China nudged up 0.2% to HK$29.6.
The Census and Statistics Department announced today that the Hong Kong's overall consumer prices rose 4.6% in September over the same month a year earlier, slightly larger than the corresponding increase of 4.5% in August, mainly due to the enlarged increases in the prices of fresh vegetables, data from Hong Kong's overall consumer prices rose 4.6% in September over the same month a year earlier, slightly larger than the corresponding increase of 4.5% in August, mainly due to the enlarged increases in the prices of fresh vegetables.
In India, intense volatility was witnessed on the Indian bourses as key benchmark indices moved into green from red in late trade. The barometer index, the S&P BSE Sensex, was provisionally up 21.72 points or 0.1%, up 135.62 points from the day's low and off 66.31 points from the day's high. The market sentiment was boosted by data showing that foreign funds stepped up purchases of Indian stocks on Friday, 18 October 2013.
Asian Paints jumped 8.71% to Rs 529.35, after the company during market hours today, 21 October 2013, said its consolidated net profit jumped 36.7% to Rs 326.80 crore on 18.3% growth in income from operations to Rs 3114.70 crore in Q2 September 2013 over Q2 September 2012.
Engineering and construction giant L&T surged 6.2% after the company after market hours on Friday, 18 October 2013, said its recurring profit after tax rose 7% to Rs 978 crore on 10% growth in gross revenue at Rs 14648 crore in Q2 September 2013 over Q2 September 2012. The company attributed top line growth to pick-up in execution of various jobs.
Elsewhere in the region, New Zealand's NZX 50 index rose 0.92%. Indonesia's Jakarta Composite index gained 0.7%. South Korea's KOSPI rose 0.03%. Malaysia's KLSE Composite added 0.17%. Singapore's Straits Times index rose 0.1%. Taiwan's Taiex index fell 0.26%.
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