By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) -- Japanese stocks soared Tuesday,
towering over other Asian markets as Tokyo investors returned from
a four-day weekend played catch-up with central-bank decisions,
strong U.S. jobs data and a weaker yen.
Australian stocks sharply narrowed their early losses after the
country's central bank cut the policy interest rate by a quarter
percentage point to 2.75%, surprising most economists who had
expected no change.
Japan's Nikkei Stock Average soared 3.4% to 14,153.36, topping
the 14,000-point level for the first time since June 2008, while
the broader Topix index gained 2.9%. The Nikkei was on course for
its best percentage gain in more than three months.
The jump came as the market reopened for the first time since
Thursday, reacting to developments in the interim, including the
European Central Bank's quarter-point rate cut, the Federal
Reserve's commitment to cut or increase its monthly bond purchases
as required, and better-than-expected data on U.S. nonfarm
payrolls.
The U.S. dollar (USDJPY) also moved back above the 99-yen level,
staying within reach of the psychologically important Yen100 level,
after trading under Yen98 during last Thursday's Japanese stock
session.
"A further widening in the U.S. yield advantage over Japan will
be required to push [the dollar's rate against the yen] higher,
especially as recent flow data have shown both Japanese investor
repatriation and net foreign buying of Japanese portfolio assets,"
Crédit Agricole head of global markets research Mitul Kotecha
said.
"Despite these inflows, we expect a break [above] Yen100 to
occur very soon, with appetite for foreign assets from Japanese
[life insurers] and government pension funds, providing much of the
ammunition for a sustained move higher," Kotecha said.
Shares of Toyota Motor Corp. (TM) jumped 4.6% a day after the
Nikkei newspaper reported the auto giant was expected to report a
more-than-tripling of its group operating profit for the year ended
March 31, exceeding the forecast it issued in February.
Also leading the charge among exporters, shares of Nissan Motor
Co. (NSANY) spiked 4%, Sony Corp. (SNE) surged 6.3%, and Nintendo
Co. (NTDOY) added 2.5%.
Meanwhile, the Shanghai Composite Index was mildly higher and
Hong Kong's Hang Seng Index edged up 0.1% in choppy trade, after an
early struggle to extend the gains they had recorded in the
previous session.
On the downside, South Korea's Kospi slipped 0.2%.
Australia pares losses after cut
Over in Sydney, the S&P/ASX 200 erased most of its losses
after the Reserve Bank of Australia's monetary-policy decision, and
was down 0.1% in afternoon trade.
Several surveys of economists showed a majority expecting no
action, though markets were pricing a roughly 50-50 chance of a
quarter-point rate cut.
Matthew Sherwood, head of investment market research at
Perpetual, said the RBA's decision came as downbeat recent data on
the Australian economy clearly showed there was room to cut
rates.
"This is unlikely to be the last cut either. ... The domestic
reporting season was indicative of the softness in the real
economy, and with financial conditions remaining tight and monetary
policy being less effective in a deleveraging cycle, there is a
clear need for lower rates," Sherwood said.
Banking stocks pared their losses after the rate cut, while some
insurers advanced. Australia & New Zealand Banking Group
(ANZBY) slipped 0.1%, well off the day's lows, while QBE Insurance
Group Ltd. (QBIEY) rose 1.9%.
Meanwhile, shares of Billabong International Ltd. (BBG.AU) were
halted in Sydney at the surfwear retailer's request, saying the
move was related to possible transactions involving the company.
The halt will be in effect until Thursday or whenever the company
makes an announcement. Billabong has been in talks with potential
buyers.
Weakness in financial stocks limited gains in Hong Kong, with
Agricultural Bank of China Ltd. (ACGBY) losing 0.3% and China
Construction Bank Corp. (CICHY) dropping 0.4%.
Heavyweight HSBC Holdings PLC (HBC) moved in a narrow range
around Monday's closing level ahead of its quarterly results later
in the day.
The performance in Shanghai and Hong Kong came as markets
awaited the release of a slew of Chinese economic data, starting
Wednesday. China will release its monthly trade data Wednesday,
followed by inflation numbers a day later.
Figures released recently from the National Bureau of Statistics
and HSBC showed Chinese economic activity had cooled in both the
manufacturing and services sectors in April.
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