Asian Markets Rise on Chinese Hopes, GM Relief
Asian markets shot to eight-month highs Monday after a gauge of China's manufacturing activity offered fresh evidence of a recovery in the world's third-largest economy.
Growing optimism that the worst of the global downturn is over, offset long-expected news that General Motors will file for bankruptcylater in the day in a government-managed process that will pump another $30 billion in U.S. taxpayers' money into the ailing automaker.
U.S. stock futures added to gains as details of GM's bankruptcy filing emerged with no major downside surprises, while Treasury futures extended modest declines.
China's official purchasing managers' index for May fell to 53.1 from 53.5, staying above high water mark of 50, which separates expansion and contraction, for the third month in a row and fueling hopes that China will lead a global recovery.
Optimism about the region as well as continued weakness in the U.S. dollar because of lingering concerns about U.S. fiscal health pushed up emerging Asian currencies across the board. The Australian dollar rose 0.6 percent to US$0.8053, gaining some 16 cents in the last three months. The currency has become a proxy for global growth prospects because of Australia's big commodity exports to China.
U.S. oil futures rose to the highest since early November at $67 a barrel, as investors shrugged off surprisingly soft South Korean export figures for May and concentrated on the China numbers, which also showed new export orders growing for the first time since June 2008.
Japan's Nikkei 225 Average gained 1.6 percent to reach a nearly eight-month closing high, as shippers including Kawasaki Kisen and resource-related shares such as Mitsui Mining and Smelting climbed on the prospect of a recovery in demand from China. The GM news also removed some short-term uncertainty from the market, helping the Nikkei extend gains.
Seoul shares closed 1.3 percent higher, with auto issues rallying on the GM news and solid May sales data, while energy issues also advanced.
Australian stocks rose 2 percent to a three-week closing high, supported by heavyweight
resources stocks amid upbeat global economic data that brightened the outlook for demand for commodities. Chinese PMI data added to the lift in confidence, while a gain in U.S. futures and Japanese shares following confirmation of General Motors' bankruptcy protection also offered a filip.
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China and Hong Kong stocks rose in tandem as investors cheered better-than-expected data from the mainland, which bolstered widespread expectations for rapid recovery in the world's third-largest economy. The strong data also helped investors overcome their jitters ahead of the GM bankruptcy. The Hang Seng Index was up 4 percent, its highest level since September 2008. The gauge rose 17 percent in May, its biggest single-month advance in a decade. Local property and bank stocks rose on reports of strong weekend property sales at improved prices amid the low interest rate environment and ample liquidity in the money system. Property conglomerate New World Development vaulted over 12 percent at one point.
China's Shanghai Composite Index climbed 3.4 percent. Analysts cited several factors lifting sentiment, including an increase in fuel prices that boosted oil shares, two manufacturing surveys that showed continued expansion, eased requirements on housing projects that aided property companies, and strength in stock and commodity markets overseas that spurred
Singapore's Straits Times Index was up 2.2 percent. Olam International gained after it agreed to sell 13.8 percent of its enlarged share capital to state investor Temasek Holdings for S$437.5 million (US$303.2 million).