Japan, Korea Stocks Rally amid Fed Hopes

Japanese and South Korean stocks jumped Thursday on hopes the Federal Reserve will maintain its bond purchases for longer, while mainland Chinese shares continued to struggle amid worries over policy outlook.

Japan’s Nikkei Stock Average JP:NIK +2.96%  ended 3% higher and South Korea’s Kospi KR:SEU +2.87% rose 2.9%, while Australia’s S&P/ASX 200 AU:XJO +1.68%  gained 1.7% and in Hong Kong afternoon trade, the Hang Seng Index HK:HSI +0.50%  climbed 0.8%.

The advances followed an upbeat finish on Wall Street overnight after U.S. first-quarter GDP growth was revised down to 1.8%, from an earlier estimate of 2.4%.

“The concerns of the market that prompted a selloff in recent weeks appear to have subsided,” said CMC Markets sales trader Miguel Audencial.

“The first-quarter U.S. gross domestic product figures increased [by less] than forecast, which the market read as a signal that the U.S. Fed is likely to step on the brakes at a later date than previously feared,” Audencial said.

China’s Shanghai Composite CN:SHCOMP -0.08% was marginally lower in afternoon trade, keeping alive the possibility of its 16th drop in 18 trading days

The benchmark had risen more than 1% earlier in the day after official data showing profits at Chinese industrial firms rose more than 15% from a year-earlier in May. But the index let those gains slip by amid festering worries over high borrowing costs in the Shanghai interbank money markets and concerns about a slowing economy.

While banks were broadly higher, coal miners and brokerages declined, with Citic Securities Co. CN:600030 -1.50%   CIIHF -2.71%  losing 1.3% and China Shenhua Energy Co. CN:601088 -1.88%   CSUAY +3.59%  dropping 2.1%.

Meanwhile, Hong Kong stocks rose to stay on course for a third straight day of gains. Shares of Industrial & Commercial Bank of China Ltd. HK:1398 +1.28% IDCBY +5.97%  gained 1.7%, and footwear major Belle International Holdings Ltd. HK:1880 +4.62% BELLY +4.13%  jumped 4%.

Meanwhile, technology shares led the strong advance in Seoul, with heavyweight Samsung Electronics Co. SSNLF -25.00% KR:005930 +6.19%  soaring 6.2% after recent losses, while LG Display Co. LPL +1.05% KR:034220 +3.40%  added 3.4%.

Data released on Thursday showed South Korea’s current-account surplus rose to a record high in May on the back of robust exports despite a global slowdown, helping to lift the market’s mood.

In Tokyo trade, the real-estate and banking sectors were higher.

Shares of Mitsui Fudosan Co. JP:8801 +9.63% MTSFF +4.05% rallied 9.3%, and Mitsubishi Estate Co. JP:8802 +9.36% MITEY -0.84% jumped 9.4%, while Shinsei Bank Ltd. JP:8303 +3.94% SKLKF +3.00% and Sumitomo Mitsui Financial Group Inc. JP:8316 +3.03% SMFG +0.79% advanced 3.9% and 3%, respectively.

In Australia, shares of in the financial and retailer sectors advanced, tracking a positive lead from Wall Street and other regional markets.

The gains came amid major political changes, with Kevin Rudd returning as prime minister after he defeated incumbent Julia Gillard in a Labor Party leadership vote late Wednesday.

TD Securities’s Asia-Pacific Research head Annette Beacher said the market would largely shrug off the political change, as the prospect of a Labor loss in upcoming general elections was a “near certainty.”

“We believe a decisive change of government is positive for business and consumer confidence,” she said.

Commonwealth Bank of Australia AU:CBA +2.78% CBAUF +6.18% rose 2.8%, and Woolworths Ltd. AU:WOW +3.12%   WOLWF -0.58% climbed 3.1%.

Source: Market Watch