Japan Leads Asia Rally After China Trade Data

Japanese stocks rallied on toward five-year highs Wednesday, outperforming other Asia markets, which also traded higher after another record finish for key U.S. equity indexes and strong Chinese trade data.

The Nikkei Stock Average JP:NIK +0.74% climbed 1.4% to 14,371.65 in Tokyo late morning trade, climbing further a day after it soared 3.6% to finish at its highest level since June 2008.

The Shanghai Composite CN:000001 +0.48%  rose 0.2%, and Hong Kong’s Hang Seng Index HK:HSI +0.86%  added 0.6%, after official data showed China posted a trade surplus of $18.16 billion in April. Exports jumped 14.7% from a year-earlier and imports rose 16.8%, with both exceeding expectations.

Stocks also rallied in other markets that count China as a key trading partner. Taiwan’s Taiex XX:Y9999 +1.27%  gained 1.1%, Australia’s S&P/ASX 200 AU:XJO +1.09% rose 0.8%, and South Korea’s Kospi KR:SEU +0.11%  climbed 0.3%.

The advances came after the Dow Jones Industrial Average DJIA +0.58%  and the S&P 500 SPX +0.52% ended at a record level Tuesday. Sentiment was also aided by news from Europe, where Germany’s benchmark index ended at a record high and the Stoxx Europe 600 finished at its highest level since June 2008.

“At present, markets are driven by heightened stimulus and the fact that economic data remain in the Goldilocks range — weak enough to warrant continued stimulus, but strong enough to keep earnings expectations positive,” said Matthew Sherwood, head of investment market research at Perpetual.

Stock Movers 

The resource sector was a notable gainer across the region as the jump in monthly imports underlined the strength of Chinese demand.

PetroChina Co. HK:857 +2.91% PTR +2.24%  rose 1.7%, and Cnooc Ltd. HK:883 +1.37%CEO +1.62%  climbed 1.2% in Hong Kong, despite an overnight drop in prices of several commodities; in Shanghai, coal miners China Shenhua Energy Co. CN:601088 +0.43%CSUAY +0.21% gained 1%, and China Coal Energy Co. CN:601898 +0.15% CCOZY -0.79% added 0.9%.

Elsewhere, Fortescue Metals Group Ltd. AU:FMG +5.42% FSUMF 0.00%  spiked 5.2%, and Rio Tinto Ltd. AU:RIO +2.63% RIO +0.36%  moved 1.8% higher in Sydney. In Tokyo, energy producer Inpex Corp. JP:1605 +1.80% IPXHF -4.31% gained 1%, and trading house Marubeni Corp. JP:8002 +1.12%   MARUY -0.73%  jumped 3.8%.

In Hong Kong, banking major HSBC Holdings PLC HK:5 +1.74%   HBC +2.15% jumped 1.6% to front the market advance a day after it reported a surge in first-quarter profits.

On the downside, Esprit Holdings Ltd. HK:330 -4.77% ESPGY -8.19% dropped 4.2% after the apparel retailer issued a profit warning.

Back in Tokyo, meanwhile, shares of Softbank Corp. JP:9984 +2.90% SFTBF -0.10% advanced 3.7% after Alibaba Group Holding Ltd. — in which the mobile-service provider holds a stake — said its profits nearly tripled in the fourth quarter of 2012.

The gains followed a day after Softbank unveiled six new smartphone models, including handsets that are compatible with high-definition television broadcasts for mobile phones, according to a Nikkei newspaper report.

Sharp Corp. JP:6753 +6.34% [ SHCAY +0.29%  soared 7.5% after the Nikkei newspaper reported two banks had increased the line of credit they set up for the company.

Some exporters also advanced on strong cues from Wall Street, with Nissan Motor Co.JP:7201 +0.20%   NSANY +0.39%  gaining 1.8%.

Sony Corp. JP:6758 +2.14%   SNE +3.33%  climbed 2.8%, taking its year-to-date gains to more than 85%.

But shares of Toshiba Corp.JP:6502 -5.01%   TOSYY -2.77%  tumbled 4.3% after the Nikkei separately reported the company may have missed its operating profit forecast for the fiscal year ended March 31.

Australian shares, which ended lower on Tuesday after the Reserve Bank of Australia (RBA) surprised most economists with an interest rate cut, gained as some banks and telecommunication major Telstra Corp. recovered on the back of their dividend appeal.

“By no means is the yield trade over following yesterday’s surprise rate cut by the RBA. And with scope for the RBA to cut rates further, we will continue to see investors forced to seek higher returns, away from bonds and bank deposits and into stocks,” said Rivkin Securities analyst Tim Radford.

Shares of Commonwealth Bank of Australia AU:CBA +1.32% CBAUF +0.63%  gained 0.8%, and Australia & New Zealand Banking Group Ltd. AU:ANZ +0.87%   ANZBY -1.26%  added 1%, while Telstra AU:TLS +1.20%   TLSYY -1.77%  also climbed 0.7%.

MarketWatch