Asia Pacific stocks closed stronger on Monday, August 06, 2012, on tracking footsteps of significant gains in US and European stocks Friday, after US government reported strong job data in July. Meanwhile buying was also accelerated after Greece pledge over the weekend to meet austerity demands as well as the People's Bank of China pledge for policy fine-tuning.
Appetite for risk assets renewed across the region after stronger than-expected payrolls growth in the US offered signs that the world largest economy is still improving. US employers added 163,000 workers in July, topping market expectation and the most in five months. Job gains were recorded in a broad set of industries, including manufacturing, business services, and education etc. A separate survey also showed that the unemployment rate rose to 8.3% in July from 8.2% in the previous month.
Investor sentiments further got momentum on lingering optimism that the ECB would work out a plan to assist European economies in trouble. Investors turning to make a more positive assessment of what Mario Draghi, ECB President, said after Thursday's policy meeting. At the post-meeting press conference, Mr. Draghi indicated that the ECB would consider buying European government bonds again although he stopped short of taking any immediate actions.
Greece, meanwhile, pledged over the weekend to meet austerity demands in exchange for funding from a EUR130 billion bailout facility arranged earlier this year, which further fueled the risk-on trading session.
Bulls were also underpinned on optimism that China would do further quantitative measures in second half of 2012 after the People's Bank of China said on its website yesterday that it will strengthen the fine-tuning of its monetary policy in the second half of this year. Many of market pundits anticipating a further cuts in interest rates and the reserve requirement ratio as inflation has eased and demand for its products has slipped.
The broadest measure of MSCI Asia Pacific index was up 1.7% around late afternoon Monday, August 06, 2012. The Standard & Poor's 500 Index futures rose 0.1% today.
In the Asia Pacific region, Japan's Nikkei225 index and South Korea's Kospi index both gained 2% each, while Indonesia's Jakarta Composite index edged up 0.1%, making the best performer and underperformer respectively in the region. Amongst other regional bourses, the Australia's All Ordinaries index added 1.2%, New Zealand's NZX50 added 0.4%, Taiwan's Taiex rose 1%, Hong Kong's Hang Seng index jumped 1.7%, China's Shanghai Composite index rose 1%, Malaysia's KLSE Composite added 0.3%, Singapore's Strait Time index rose 0.7%, and India's Sensex added 1.2%.
Back to the regional markets, Tokyo stocks skyrocketed, sending the benchmark Nikkei Stock Average higher by 2%, while broader Topix index escalated 1.6%, as investors chased for value buying across the board, with shares in export related companies, financials, and resources linked players led gains.
Exporters had wonderful day today, thank to yen depreciation against basket of major currencies, especially against the euro. Canon added 3.5% at 2,788 yen, Nikon 4% at 2,199 yen, and Honda Motor 2.8% at 2,470 yen.
Toyota Motor Corp said April-June profit zoomed to 290.3 billion yen from 1.1 billion yen the year before. Automaker also raised its sales target for this year to 9.76 million vehicle, represent a 23% increase from the 7.95 million vehicles sold in 2011, and is 180,000 vehicles more than what Toyota gave in February. Toyota shares increased 2.5% to 3,140 yen. Isuzu Motors added 6.4% at 414 yen after the automaker posted operating profit of 28.1 billion yen player, up from a net profit of Y8.7 billion a year ago
All Nippon Airways (ANA) posted a net profit of 668 million yen in June quarter, reversing a year-earlier loss, thanks to increased travel demand. The carrier's sales rose 12.5% from a year ago to 343.19 billion yen as the Japanese economy continued its recovery from last year's quake-tsunami disaster, while the stronger yen made overseas trips cheaper. ANA shares fell 0.6% to 176 yen.
Sharp Corp plunged 5.7% to 181 yen, extending their recent heavy sell-off, on news report that the head of Hon Hai Precision Industry Co. hoped to renegotiate his company's investment in Sharp, given the large drop in the latter's share price since the deal was drawn up.
In China, the Mainland China stockmarket ended with healthy gain, with the Shanghai Composite index advanced 22.12 points, or 1.04%, at 2,154.92, as investors continued hunting recently battered stocks on growing optimism about quantitative easing by domestic government. Most of the sectoral heavyweights closed higher, with gains led by materials and resources and energy players, and consumer related goods.
Materials and resources companies stocks had best day today, helped by stronger base metals prices and renewed optimism of fine-tuning of monetary policies. Aluminum Corp. of China gained 1.9% to 6.05 yuan and Zhuzhou Smelter Group Co surged 10% to 8.15 yuan. Jiangxi Copper Co added 5.1% to 21.50 yuan after the company planned to offer its shareholders a cash dividends of no less than 10% of the annual attributable profit from 2012 to 2014. Non-ferrous metals producers posted a strong run. Inner Mongolia Baotou Steel Rare-earth (Group) Hi-tech Co increased 9.4% to 41.46 yuan. Xiamen Tungsten Co jumped the day limit of 10% to 41.87 yuan.
In India, the Indian markets were trading on a firm note, with barometer index, BSE Sensex was up 1.2% around late afternoon, led by oil & gas, realty and auto stocks.
Indian index heavyweight Reliance Industries (RIL) surged on reports benchmark Singapore gross refining margins (GRM) have strengthened from the 2nd week of July 2012 to average at $8 a barrel from $6.7 a barrel in the quarter ended June 2012. Index heavyweight and cigarette maker ITC edged lower. Ambuja Cements hit record high. Capital goods stocks gained across the board. Steel Authority of India (Sail) rose as the company's core operating profit margin (OPM) surged to 14.05% in Q1 June 2012 from 12.16% in Q1 June 2011.
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