By Yoshiaki Nohara and Shani Raja - Oct 19, 2011 8:08 AM GMT+0700
Asian stocks rose on signs a global economic recovery may be strengthening after Bank of America Corp. swung to a profit and Intel Corp. forecast sales that beat analyst estimates, boosting the earnings outlook for Asia’s companies.
Toyota Motor Corp. (7203), the world’s biggest carmaker, rose 0.7 percent. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s largest lender, advanced 0.6 percent, after Bank of America climbed 10 percent in New York. BHP Billiton Ltd. (BHP), Australia’s No. 1 oil producer, added 0.4 percent after crude rose to the highest price in more than a month.
“There’s bound to be some residual optimism because of the strong gains in the U.S. on the back of some earnings optimism,” said Will Seddon, who helps oversee more than $300 million at White Funds Management in Sydney. “We’re bound to see some positive momentum in Asian markets, but the risks with the European situation are still very, very high.”
The MSCI Asia Pacific Index rose 0.5 percent to 117.05 as of 10:06 a.m. in Tokyo. More than two stocks advanced for each that fell on the gauge. The measure has dropped 15 percent this year.
Nine of 10 groups in the Asia-Pacific measure gained after Intel reported results after U.S. markets closed. Intel shares rose 4.4 percent to $24.44, adding to a 0.5 percent increase in regular trading. Goldman Sachs Group Inc. advanced 5.5 percent even after reporting its second quarterly loss in 12 years as the firm lost money on investments and revenue declined from trading, asset management and securities underwriting.
‘Good Data Flow’
The National Association of Home Builders/Wells Fargo sentiment index climbed to 18, the highest level since May 2010, the Washington-based group reported yesterday.
“Some good data flow in the past 24 hours helped support markets, as has profit reporting in the banking sector,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $145 billion. “Worries about Europe are likely to persist ahead of the weekend European leaders’ meeting.”
Japan’s Nikkei 225 Stock Average gained 0.7 percent and South Korea’s Kospi Index added 0.3 percent. Australia’s S&P/ASX 200 rose 0.8 percent. Futures on the Standard & Poor’s 500 Index dropped 0.5 percent.
France and Germany are engaged in “intensive talks” on bolstering the European Financial Stability Facility, said Steffen Seibert, a spokesman for German Chancellor Angela Merkel.
‘No Deal’
He declined in an interview to comment on a report in the Guardian that they reached agreement on increasing the size of the fund, saying he won’t comment on intermediate results of the negotiations. A person with direct knowledge of the talks told Bloomberg News no deal has been reached.
“Markets in Asian will trade rather cautiously given there’s doubt about the validity of that article,” said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. There’s “a lot of nervousness around what solution we are likely to see regarding Europe at the moment. We will see things move a little bit higher in Asia, but they will remain fragile.”
Spain’s credit rating was cut for the third time since June 2010 by Moody’s Investors Service as Europe’s sovereign-debt crisis threatens to engulf the nation. Moody’s reduced Spain’s ranking to its fifth-highest investment grade, cutting it by two levels to A1 from Aa2, with the outlook remaining negative, the rating company said yesterday.
Standard & Poor’s downgraded Spain on Oct. 14 to its fourth-highest investment grade after Fitch Ratings cut it to the same level on Oct. 7, the day it also downgraded Italy.
To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.
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