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Asia in positive territory after strong US lead; Nikkei jumps 2.8%

Major Asian markets traded mostly higher on Thursday, on the back of the stronger lead from Wall Street following positive economic data. South Korean markets underperformed regional peers, with the benchmark Kospi sinking below the flat line despite opening firmer as automakers declined.

Japan’s Nikkei 225 touched levels not seen since January 1992, jumping 2.84 percent as markets there opened for their first day of trade after a long New Year weekend.

Most sectors were in positive territory, with financials, technology and automakers higher across the board. Toyota rose 2.25 percent and Honda climbed 2.51 percent. Heavyweight SoftBank Group rose 4.2 percent.

Meanwhile, the Kospi slid into negative territory, with the index slipping 0.49 percent after trading higher at the open. Technology names traded mixed, with Samsung Electronics losing 0.85 percent. Chipmaker SK Hynix held onto gains, climbing 1.16 percent.

Automakers saw declines, with Hyundai Motor falling 2.33 percent and affiliate Kia Motors losing 2.61 percent.

Shipbuilders, which had rallied in the new year due to optimism in the outlook for the sector, were mixed. Hyundai Heavy Industries was 7.69 percent higher and Daewoo Shipbuilding was off by 0.58 percent.

In Sydney, the S&P/ASX 200 edged up by 0.04 percent, with the energy sub-index the top-performer of the day after oil prices touched their highest levels in two and a half years. Oil and gas producers mostly notched gains, with Oil Search rising 3.47 percent and Woodside climbing 2.71 percent. Greater China markets clung to gains in the morning. Hong Kong’s Hang Seng Index rose 0.38 percent.

Energy-related plays were higher following oil’s overnight gains, with the casino and tech sectors also recording sizable gains: CNOOC was up 3.27 percent, Tencent advanced 1.37 percent and Melco International Development added 1.97 percent.

On the mainland, markets saw moderate gains. The Shanghai Composite added 0.45 percent and the Shenzhen Composite advanced 0.19 percent.

A survey released Thursday showed the services sector in the country grew at its fastest rate in more than three months in December. The Caixin services PMI came in at 53.9 last month, compared to the 51.9 seen in November. That was the highest level recorded since August 2014, according to Reuters.

The positive read followed the release of expectation-topping Caixin manufacturing PMI data earlier this week. Official PMI for December had been in line with estimates.

U.S. stocks closed higher in the last session, with the S&P 500 closing above 2,700 for the first time as technology stocks notched more gains. Semiconductor names led the sector higher, with AMD jumping 5.19 percent and Nvidia soaring 6.58 percent on the day.

The Dow Jones industrial average advanced 0.4 percent, or 98.67 points, to close at 24,922.68 and the S&P 500 gained 0.64 percent to finish at 2,713.06.

On the data front, manufacturing activity stateside topped expectations, with the ISM manufacturing index for December released Wednesday coming in at 59.7.

Investors also digested minutes from the Federal Reserve’s meeting in December, which showed that most members thought upcoming changes in taxes would lead to higher real GDP growth. The minutes also showed members of the Federal Open Market Committee were somewhat at odds over meeting the central bank’s inflation target of 2 percent.

Elsewhere, European markets ended higher as new financial sector rules under Mifid ll came into effect, with the pan-European Stoxxx 600 closing nearly 0.5 percent higher.

The dollar was steady after firming overnight on the back of optimistic releases stateside. The dollar index, which tracks the U.S. currency against a basket of six peers, traded at 92.161 at 1:00 p.m. HK/SIN, after falling to a more than three-month low earlier this week.

The greenback also edged higher against the yen to fetch 112.64, after beginning the week at the 112.3 handle.

Meanwhile the Korean won declined as the dollar firmed. The currency had traded at its highest levels in more than three years earlier this week. At 1:00 p.m. HK/SIN, the won traded at 1,064.60 to the dollar.

“Support for the dollar should provide some relief in Asia over strong exchange rates,” said DBS Group strategists Eugene Leow and Philip Wee in a morning note, highlighting South Korea’s concerns over recent strength in the won.

Oil prices extended gains after touching their highest levels in two and a half years on Wednesday on the back of a wider market rally. The move higher in prices also came as protests continued in Iran, although analysts said those were unlikely to negatively impact oil production in the country.

U.S. West Texas Intermediate advanced 0.75 percent to trade at $62.09 per barrel after rising 2.1 percent in the last session. Brent crude futures tacked on 0.43 percent to trade at $68.13.

Shares of Japanese videogame maker Nintendo were up 4.42 percent following news that its hit “Pokemon Go” game was headed to China. The Financial Times reported earlier this week that U.S.-based developer Niantic was partnering with NetEase to launch the game on the mainland.

Dalian Wanda Commercial Property was downgraded from “BBB” to “BB+” by Fitch Ratings on Wednesday, a two-notch downward revision. Fitch said the downgrade reflected the company’s “inability to access offshore funding channels to boost its offshore liquidity in a timely manner.”

Source: CNBC

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