HONG KONG, Oct 20 — Asian stocks rose to a 14-month high, powering global stocks to year highs and a 75 per cent gain from lows struck in March amid the global financial crisis.
The weak dollar supported commodity prices, with oil briefly topping US$80 (RM272) a barrel for the first time in a year, and gold near a record high, as the dollar remained under pressure from investors searching for higher returns elsewhere.
Portfolio flows into emerging market assets have been torrential, leading Brazil to slap a 2 per cent tax on foreign investment in domestic stocks and bonds to try to cool its real currency, which has surged 36 per cent this year.
Japan’s Nikkei share average rose a per cent to a three-week closing high, buoyed by technology shares after a wave of solid US company earnings, more recently from Apple and Texas Instruments, underscore the continuing economic recovery.
“These (US) results are inevitably providing a bit of a boost, particularly for parts suppliers and chip makers, while a whole range of China-linked shares are also doing well,” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments in Tokyo.
Shares of Komatsu Ltd, the world’s second-biggest maker of construction equipment, rose 1.4 per cent after a report the company had made 10 billion yen in operating profit for the July-September quarter on demand from China and other developing markets.
The benchmark MSCI index of Asia-Pacific shares outside Japan rose about 0.9 per cent, coming off a bit from a fresh 14-month high scaled earlier in the day. The materials and financial sectors led the charge.
The MSCI index of global shares edged up about 0.3 per cent to its highest level since Sept. 29, 2008.
Shanghai and Hong Kong stocks got a further lift on hopes of strong economic data due this week.
Optimism over corporate earnings and China’s economic outlook gave investors the confidence to bet on further gains in local stocks, sending the key index up to a 14-month closing high. The benchmark Hang Seng Index rose 0.8 per cent, while the Shanghai Composite jumped almost twice as much.
Australian shares gained more than a per cent, followed by a 0.6 per cent rise in South Korea and flat closes in Singapore and Taiwan.
India, returning from a public holiday, was the regional laggard with a 0.6 per cent fall, pulled by stock index heavyweight Reliance Industries, as the Supreme Court started hearing arguments in the energy giant’s legal dispute with Reliance Natural Resources.
Investors have been anxiously waiting for the earnings season for signs that consumer demand is improving, which would reinforce the chances of a sustainable global economic recovery and give new legs to a seven-month equity rally which has been showing signs of flagging.
Dariusz Kowalczyk, chief investment strategist with SJS Markets in Hong Kong, said in a note that the eight companies in the US S&P 500 that reported results yesterday topped consensus by an average 15 per cent.
The ICE Futures US dollar index, a gauge of its performance against six major currencies, fell as far as 75.12, its lowest since August last year.
The euro was nearly unchanged on the day around US$1.4975, meeting some selling pressure by dealers protecting positions at the round figure of US$1.50.
Minutes from a Reserve Bank of Australia policy meeting earlier this month pointed to more interest rate increases ahead and said the stronger Australian dollar was a sign of improving sentiment that would help contain inflation.
“There are no warning signs for AUD bulls,” said Patrick Bennett, Asia foreign exchange and rates strategist with Societe Generale in Hong Kong, in a note.
The Australian dollar briefly rose above USUS$0.93 to the highest in 14 months before easing to US$0.9280, about even on the day.
Gold firmed on dollar weakness, climbing 0.3 per cent to US$1,065.50 an ounce in the spot market, just shy of a record US$1,070.40 hit last week.
US crude for November delivery rose to US$80.05 a barrel, its strongest since Oct 14, before retreating a bit.
“I think we will continue higher as we move further into the fourth quarter. Investors think equity earnings are a good guide for the economic outlook so the better-than-expected reporting season is supporting,” ANZ’s senior commodities analyst Mark Pervan said. — Reuters
Show/Hide comments
Show/Hide comment form
