By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) — Asian markets ended mostly higher Tuesday as risk appetite improved after U.S. President Barack Obama announced an extension of Bush-era tax cuts, and as Ireland’s parliament prepared for a budget vote.
Shanghai stocks recovered from initial losses suffered after a media report suggested that China’s central bank may raise rates around the weekend, while Australian shares advanced after the central bank there left interest rates unchanged and signaled a steady monetary policy.
China’s Shanghai Composite index (CN:SHCOMP 2,876, +18.68, +0.65%) gained 0.7%, Hong Kong’s Hang Seng index (HK:HANGSENG 23,428, +190.46, +0.82%) added 0.8%, Australia’s S&P/ASX 200 (AU:XJO 4,727, +38.22, +0.82%) advanced 0.8%, South Korea’s Kospi climbed 0.5% and Taiwan’s Taiex ended flat.
Among the decliners, Japan’s Nikkei Stock Average (JP:NI225 10,141, -26.13, -0.26%) fell 0.3%, while India’s Sensex (XX:SENSEX 19,935, +14.38, +0.07%) dropped 0.2% in afternoon trade.
Dow Jones Industrial Average (DJIA 11,362, -19.90, -0.17%) futures were up 87 points in screen trade.
“Overall, liquidity is expected to be abundant in the global equity markets and people are just putting money back in emerging markets,” said Steven Leung, director at UOB Kay Hian. “This week, there will be a lot of noise regarding the People’s Bank of China hiking rates toward the weekend, but fundamentally speaking, a rising interest-rate cycle is positive for Chinese banks and insurance companies.” Read full story on reported possible rate hike.
Among gainers in Hong Kong, shares of Bank of China (BACHY 13.14, -0.36, -2.67%) (HK:3988 4.19, +0.07, +1.70%) climbed 1.7% and Industrial & Commercial Bank of China (HK:1398 5.97, +0.07, +1.19%) (IDCBY 39.00, -0.90, -2.26%) gained 1.2%.
On mainland exchanges, China Life Insurance Co. (LFC 64.25, -0.57, -0.88%) (CN:601628 23.36, +0.18, +0.78%) rose 0.8% and Ping An Insurance (PNGAY 23.69, +0.05, +0.21%) (CN:601318 60.42, +0.61, +1.02%) added 1%, with gains also aided by mining and metal shares.
Jiangxi Copper Co. (CN:600362 36.93, +0.86, +2.38%) (JIXAY 124.00, +0.28, +0.23%) rose 2.4%, while Aluminum Corp. of China (ACH 22.94, -0.16, -0.69%) (HK:2600 7.26, +0.16, +2.25%) gained 1.1%.
In Sydney, shares extended morning gains after the country’s central bank held rates steady at 4.75% and adopted a benign stance on policy. The Reserve Bank of Australia said that “over the next few quarters, inflation is expected to be little changed,” reinforcing the view that a rate increase will be some way off.
Josh Williamson, economist at Citigroup, said the RBA statement “suggests they won’t do anything [for a while] based on the outlook that they’ve seen.”
Gains in resource stocks underpinned the market, with BHP Billiton Ltd. (BHP 91.68, +2.95, +3.33%) (AU:BHP 45.08, +0.55, +1.24%) up 1.2%, Rio Tinto PLC (AU:RIO 87.34, +1.34, +1.56%) (RIO 72.75, +2.44, +3.47%) adding 1.6% and Newcrest Mining (NCMGY 40.85, -0.31, -0.75%) (AU:NCM 41.50, +0.41, +1.00%) advancing 1%.
Japanese stocks were led lower by exporters, with Honda Motor Co. (HMC 37.95, -0.25, -0.65%) (JP:7267 3,075, -60.00, -1.91%) dropping 1.9% and Canon Inc. (CAJ 49.15, -0.47, -0.95%) (JP:7751 4,055, -15.00, -0.37%) losing 0.4%.
“There was a widespread view for a shift towards the weaker yen, but that story line collapsed following the [weak] U.S. jobs data,” said Yutaka Yoshii, general manager at Mito Securities.
In Seoul, the market rose on gains in steel and shipbuilding stocks, which recouped some of their recent losses. Hyundai Heavy Industries added 2.7%, while Posco (PKX 103.94, -0.14, -0.13%) rose 1.4%.
Elsewhere in the region, New Zealand’s NZX 50 dropped 0.3% and Philippine shares shed 0.6%.
In afternoon trade, Singapore’s Straits Times index rose 0.3% and Thailand’s SET added 0.8%.
In foreign-exchange markets, the euro climbed as a meeting of euro-zone finance ministers continued in Brussels, and as traders looked to Ireland’s budget, which is expected to pass a critical vote later in the day.
The single currency was fetching $1.3331 from $1.3321 late in New York on Monday, and 110.34 yen from ¥110.08. The dollar was buying ¥82.75 yen, compared with ¥82.62.
The Australian currency was fetching 99.19 U.S. cents from 99.10 before the RBA statement.
December Japanese government bond futures were down 0.02 at 141.46 points, on profit-taking, while the 10-year cash bond yield was up one basis point at 1.165%.
Spot gold was at $1,422.80 per troy ounce, down 90 cents from its New York close on Monday.
January Nymex crude-oil futures, which rose to a 26-month high on Monday, were up four cents at $89.42 per barrel on Globex.
