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Asian Stocks Surge After Wall Street Rally

CNBC.com with Reuters
Thursday, 8 Jul 2010 | 6:15 AM ET

Asian stocks were up sharply on Thursday, after optimism over the upcoming earnings season sparked a rally on Wall Street, driving the Dow up 2.8 percent.

Japan's stocks advanced 2.8 percent after a bullish forecast from U.S. financial firm State Street fueled optimism about the upcoming earnings season and helped soothe sentiment hurt by recent jitters of a slowdown in the global economy.

U.S. earnings begin in earnest next week when Alcoa reports on Monday, and Japan's reporting season gets into a full swing later this month.

The benchmark Nikkei Average256.09 points to 9,535.74 as investors covered short positions on the belief that the index's slide to a seven-month low this week was overdone.

On Tuesday, the index slid as low as 9,091.70, just above the November 2009 low of 9,076.

The broader Topix advanced 2.3 percent to 861.02.

Financials climbed after their U.S. counterparts gained following the bullish forecast from State Street.

Mitsubishi UFJ Financial rose 3.4 percent to 428 yen, and Sumitomo Mitsui Financial added 3 percent to 2,679 yen.

Shares of exporters also climbed as the yen pulled back to a two-week low versus the euro .

Chip-tester maker Advantest soared 6 percent to 1,881 yen and chip gear manufacturer Tokyo Electron climbed 5.2 percent to 4,900 yen. Honda Motor advanced 3.7 percent to 2,616 yen.

Fuji Electronics jumped 4.4 percent to 1,019 yen after semiconductor wholesaler said its operating profit in the March-May quarter jumped 21.5 times from the previous year to 733 million yen ($8.35 million).

Kirin Holdings gained 1.8 percent to 1,138 yen on a Nikkei business daily report that the beer maker is likely to post a 32 percent jump in first-half operating profit to 53 billion yen, which would be 3 billion yen more than the company had estimated.

Daiei Inc climbed 8.8 percent to 395 yen after the supermarket chain announced that it would swing into the black in the March-May quarter.


Seoul shares trekked higher as earnings hopes in the U.S. buoyed sentiment and sent exporters, shipyards and much-battered financials higher.

The Korea Composite Stock Price Index (KOSPI) was up 1.37 percent at 1,698.64 points.

Exporters climbed, with memory chip issues advancing, lifted by a 5 percent rise in the U.S. Philadelphia semiconductor index.

LG Electronics, the world's No.3 handset maker, rose 1.14 percent and Kia Motors, the country's No.2 automaker, gained 1.75 percent.

Financials also bounced from their recent streak of losses, as investor appetite for risks strengthened. KB Financial Group jumped 4.7 percent and Shinhan Financial Group climbed 4.8 percent.

Shares in Hyundai Department Store surged 4.64 percent before closing up 2.1 percent, on news that the Korea Exchange had approved an initial public offering plan worth up to 270 billion won ($221 million) by Hyundai Homeshopping.

Hyundai Department Store owns 19 percent of the firm, according to a regulatory filing in March.

The Bank of Korea (BOK) is scheduled to decide interest rate policy on Friday, and 10 out of 13 analysts polled expect the BOK to hold its policy rate steady at a record-low 2.0 percent for a
17th consecutive month.

Australian stocks surged 2.4 percent , buoyed by gains in commodity prices and optimism about the upcoming U.S. earnings season.

Strength on the domestic job front also boosted sentiment. The number of employed in Australia surged past expectations in June, rising 45,900 month-over-month, and the jobless rate dipped to 5.1 percent.

Economists had expected an unemployment rate of 5.2% in June, with the number of employed up 15,000.

The big four banks were standout performers, rising by at least 2.7 percent, on relief about the robustness of financial stress tests for Europe's banks and a July 23 date for results of the tests to be released.

Miners also logged health gains on the back of rises in base metals and gold prices.

Global miners BHP Billiton rose 1.8 percent and Rio Tinto advanced 1.9 percent. Australia and New Zealand Banking Group led the banks, powering 4.3 percent higher to close at A$22.14.

The benchmark S&P/ASX 200 index jumped 102.1 points to end at 4,356.7.

New Zealand's benchmark NZX 50 index rose 0.7 percent to close at 2,983.9.

But takeover target Sigma Pharmaceuticals fell 2.2 percent to A$0.44 after reports that one of its biggest shareholders was unhappy with a lowered bid from South Africa's Aspen
Pharamacare.

Hong Kong stocks climbed 1.3 percent, spurred by the successful initial public offering of Agricultural Bank of China and as banking issues tracked their U.S peers higher.

The Hang Seng Index rose 263.0 points to 20,119.8 .

HSBC Holdings gained 2.2 percent and Bank of China was up 2 percent.

China Merchants Bank advanced 2.1 percent. The mid-sized Chinese lender said on Wednesday its net profit rose over 50 percent in the first half of the year, based on Chinese
accounting standards.

Aluminum Corp of China (Chalco) rose 2.6 percent. Its parent, Chinalco, is considering buying a stake in the massive Oyu Tolgoi copper-gold project in Mongolia, according to a regulatory filing.

Semiconductor International Manufacturing Corp (SMIC), which is planning a $100 million share sale, fell 8.5 percent.

Amber Energy declined 3.6 percent, after it said it expected its profits in the first half of this year to be significantly lower from a year ago, hit by insufficient gas supply in China's Zhejiang province.

China's key stock index fell 0.3 percent in low volume, with profit-taking wiping out earlier gains.

Shanghai's stock market has been plagued with concerns over a flood of issuances including AgBank's massive IPO, a squeeze in money markets and more recently a series of bank rights issues.
The Shanghai Composite Index ended at 2,415.2 points, after closing up 0.5 percent on Wednesday.

"The reason for today's fall is investors took profits after earlier rises," said Zheng Weigang, an analyst at Shanghai Securities. "Now investors will focus on companies' mid-year results, that may boost the market in the short term."

Singapore's Straits Times Index rose 1 percentand Malaysia's KLCI traded to the upside.