TN: Asian stocks rise on yen fall, Wall Street gains
Asian stocks bounced back Tuesday as big corporate takeovers in the U.S. gave investors a new shot of confidence and the yen retreated from a nine-month high against the dollar.
Large acquisitions announced overnight by Abbott Laboratories and Xerox Corp. helped Wall Street break a three-day slide. The $6 billion-plus deals raised hopes of a rebirth in takeover activity and a recovery of the financial system. A weaker yen also added to the optimism, which fueled most major Asian markets higher after a sharp fall the day before.
Hong Kong's Hang Seng index led regional gains with a 2.3 percent jump to 21,051.87. Japan's benchmark Nikkei 225 stock average rose 63.38, or 0.6 percent, to 10,072.90, while South Korea's key index added 0.8 percent to 1,689.33.
Markets in Australia, Taiwan, India and Singapore were also higher.
The U.S. dollar was near 90 yen in early afternoon trading from 89.63 yen late Monday in New York. The yen's decline gave stocks much-need relief after the Japanese currency climbed to a nine-month high against the dollar on Monday.
Japanese exporters pared recent losses, with automaker Nissan Motor Co. up 3.6 percent and Toshiba Corp. up 3.2 percent. A higher yen hurts exporters by reducing the value of overseas profits when repatriated.
Technology stocks elsewhere in Asia also rose. South Korea's Samsung Electronics Co. gained 1.5 percent, and chipmakers in Taiwan advanced on news the island's government will let them invest in mainland China.
Analysts, however, cautioned against getting too excited about the day's rise.
Fumiyuki Nakanishi, chief equity strategist at SMBC Friend Securities in Tokyo, said that Japan's economy remains weak and that yen appreciation will likely force companies to downgrade their earnings forecasts. The yen remains much stronger than the 95 yen to the dollar level that most earnings forecasts are based on.
Fresh government data showed Tuesday that key consumer price index fell by a record 2.4 percent in August amid rising unemployment and falling wages.
"Stocks can't really rise under these circumstances," he said. "The direction of the equity market in the coming month will be closely tied to the foreign exchange rates."
Chinese markets declined ahead of the National Day holidays starting Thursday. Markets will reopen Oct. 9.
In New York Monday, the Dow rose 124.17, or 1.3 percent, to 9,789.36.
The broader Standard & Poor's 500 index rose 18.60, or 1.8 percent, to 1,062.98, and the Nasdaq composite index rose 39.82, or 1.9 percent, to 2,130.74.
U.S. futures pointed to a modestly higher open on Wall Street Tuesday. Dow futures were up 7 points, or 0.1 percent, at 9,735.
Oil prices were little changed in Asia, with benchmark crude for November delivery up 2 cents at $66.86.
