Asia Stocks Firm After Fed, While Japan Soars

Asia stocks traded mostly higher Thursday, with Japanese shares rallying, after the U.S. Federal Reserve announced new policy targets and an expansion to its asset-buying program.

Japan’s Nikkei Stock Average  surged 1.7% after closing at its highest level since April on Wednesday, while South Korea’s Kospi  rose 0.8%, Taiwan’s Taiex  added 0.6%, and Singapore’s Straits Times Index  added 0.4%.

But other major bourses saw more muted action, with Australia’s S&P/ASX 200 index  ending little changed after reaching its best level in around 17 months on Wednesday.

Hong Kong’s Hang Seng Index  also traded flat after also hitting a mid-2011 high on Wednesday, while the Shanghai Composite Index  fell 0.6%, paring its month-to-date advance to just over 4.5%.

The mixed-to-better performance in Asia echoed U.S. trading overnight, when the Dow Jones Industrial Average  and S&P 500  ended almost flat after Federal Reserve Chairman Ben Bernanke warned that the Fed does not have the ability to shield the economy from the fiscal cliff of large potential tax hikes and spending cuts.

The U.S. central bank chief made the comments at a news conference Wednesday to discuss the Fed’s newly announced plan to expand its asset-buying program and to hold rates close to zero until unemployment falls below 6.5% or until inflation accelerates.

Broadly, “[Asia] sentiment has been boosted by the Fed’s confirmation of outright purchase of long-dated Treasurys, which translates into a bigger asset-purchase program,” said Frances Cheung, strategist at Crédit Agricole.

“Flows into Asian markets are likely to continue,” she said.

Japanese stocks were the stand-out Thursday, climbing significantly as the dollar  shot above the ¥83 mark overnight for the first time since April 2, after sitting in the low ¥82 range the previous day.

While the move partly stemmed from the Federal Reserve’s announcements and a steeper Treasury curve, according to BNP Paribas currency strategists, “at the same time markets remain clearly focused on the Bank of Japan’s policy” ahead of Japanese leadership elections this weekend and a central-bank decision next week.

Speculation that leadership change in Sunday’s election would lead to pressure on the Bank of Japan to expand its already loose monetary policy has hammered the yen and boosted currency-sensitive companies in recent weeks.

Many Tokyo-listed exporters added to gains on Thursday, with TDK Corp.   jumping 4.6%, and Pioneer Corp.   rallying 3.8%.

Sharp Corp.   soared 10.6%, Panasonic Corp.   climbed 8.5% and Sony Corp.  improved by 6.6%.

Mazda Motor Corp.   drove 4.4% higher, and Honda Motor Co.   advanced 2.7% despite its Canadian unit announcing a recall of some vehicles.

Stan Shamu, market strategist at IG Markets, said that the dollar may make further gains against the yen in the near future.

“Many Japanese exporters put currency hedges in place around ¥83.00 to protect against adverse Japanese yen strength; if these firms believe the pair will have a sustained move above ¥83.00, then you may see a number of them unwind these hedges, pushing U.S. dollar/yen even higher,” he said.

Over in Hong Kong, transport firms saw some share-price strength, with ports operator Cosco Pacific Ltd.  up 0.9%, and airline Cathay Pacific Airways Ltd.  rising 1%.

Aluminium Corp. of China Ltd.    advanced 1.7% in Hong Kong, but fell 0.2% in Shanghai, while PetroChina Co.     edged up 0.2% in Hong Kong but slipped 0.5% in Shanghai.

Power companies weighed in Hong Kong, with China Resources Power Holdings Co.   falling 4.3%, and CLP Holdings Ltd.   down 3.4% after reports it plans to raise about $984 million via a share placement.

South Korean shares took support from technology companies, with heavyweight Samsung Electronics Co.    extending its recent all-time highs with another 2% gain Thursday.

Seoul’s shipping sector got a boost as STX Pan-Ocean Co. rose another 6.7% to extend week-to -date gains to just under 40%.

Late Wednesday, conglomerate STX Corp.  said that it’s in talks with multiple investors to sell its 27.4% stake in the shipping company, Dow Jones Newswires reported, citing a STX executive. Shares of STX Corp. traded 1% lower in Seoul.

In Australian action, furniture retailers gained, with Super Retail Group Ltd.  up 2.3%, and Harvey Norman Holdings Ltd. , also a leading electronics and appliances seller, rallying 3.6%.

On the downside in Sydney, supermarket operator Wesfarmers Ltd.    fell 1.2%, and telecom Telstra Corp.   lost 0.5%.

Marketwatch