Business

Published: Monday July 27, 2009 MYT 11:52:00 AM
Updated: Monday July 27, 2009 MYT 7:34:05 PM

Asian stocks extend rally


World markets rise at start of new week

LONDON (AP) - World stock markets rose again Monday amid ongoing hopes that corporate earnings will outperform expectations and give another signal that the global recession is loosening its grip.

In Europe, the FTSE 100 index of leading British shares was up 7.75 points, or 0.2 percent, at 4,584.36 with publishing group Pearson PLC up around 10 percent after it raised its earnings guidance for the year despite testing market conditions.

However, Rexam PLC, Europe's biggest maker of cans for the drinks industry, slid over 10 percent after it confirmed it may raise 350 million pounds via the issue of new shares to help it pay down its debt burden.

Meanwhile, France's CAC-40 index was 18.61 points, or 0.6 percent, higher at 3,385.06 while Germany's DAX jumped 58.33 points, or 1.1 percent, to 5,287.69, with Commerzbank AG the biggest riser after it sold its Swiss Dresdner Bank unit to the LGT Group of Liechtenstein. Commerzbank shares rose 7 percent.

Stocks around the world have rallied strongly over the last couple of weeks after better than expected U.S. earnings pushed many of the world's leading indexes to 2009 highs amid hopes that the worst of the recession was over. Equities usually rally around 6-9 months before actual economic growth emerges.

While most of the focus has centered on U.S. earnings, the European reporting season really kicks into gear this week, providing investors with crucial insights about whether the recession is easing as much as it apparently is in the U.S.

Among others, steel company Arcelor Mittal, Deutsche Bank AG, carmaker Daimler AG, chemical company BASF SA and France Telecom SA will report their earnings in coming days and investors will be interested to see if the recent improvement in forward-looking surveys is being felt in the real world.

It's a quieter week in the U.S. than of late though there will be a lot of interest in earnings from the likes of media company Time Warner Inc., Dow Chemical Co., Colgate-Palmolive Co and ExxonMobil Corp.

Despite the early gains this week, analysts warned that the markets may well take a breather and book some profits accumulated over the last couple of weeks.

"It seems holding on to those gains may be the biggest issue as at one point traders will look to book profits on the recent rally," said Jimmy Yates, head of equities at CMC Markets.

At the moment, the rally was set to continue on Wall Street. Dow futures were up 33 points, or 0.4 percent, at 9,091 while the broader Standard & Poor's 500 futures rose 3.1 points, or 0.3 percent, to 980.90. Both would set new highs for 2009 should they open as solidly as anticipated by the futures markets.

Earlier, Asian markets extended their winning streak, with many of the major indexes up 1 percent or more.

Tokyo's Nikkei 225 stock average added 144.11 points, or 1.5 percent, to 10,088.66, and Hong Kong's Hang Seng rose 268.83, or 1.4 percent, to 20,251.62.

South Korea's Kospi gained 1.4 percent and Australia's stock measure was up by 1.2 percent.

In Shanghai, the main index climbed 1.9 percent, buoyed by the strong performance of the first company to list on China's main stock exchange in 11 months.

Sichuan Expressway Co. surged 324 percent to 15.25 yuan ($2.22) per share before falling back to end the day at 10.90 yuan ($1.59) - still a 203 percent gain over the price that shares were sold for in its initial public offering. The company was the first to start trading in Shanghai since regulators ended a ban on IPOs in June.

"I'm speechless. Even the most optimistic investors wouldn't have expected such a high price," said Cao Xuefeng, an analyst for Huaxi Securities in the western city of Chengdu.

Investor hunger for riskier assets extended to commodities, with benchmark crude for September delivery gaining 47 cents to $68.52 barrel in electronic trading on the New York Mercantile Exchange. On Friday, the contract rose 89 cents.

The dollar rose 0.4 percent to 95.14 yen while the euro was up 0.3 percent at $1.4261.

Earlier report

HONG KONG: Asian markets extended their winning streak Monday as hopes company earnings will rebound along with global growth continue to drive investors into stocks.

A man looks at an electric stock board at a securities company in central Tokyo on Monday. Japan stocks rose sharply Monday, sending the benchmark Nikkei 225 stock index above the 10,000 level for the first time in almost four weeks. The Nikkei shot up 173.72 points, or 1.8 percent, to 10,118.27 at the end of the morning session. (AP Photo/Hiro Komae)

Benchmarks across the region added over 1 percent each, oil rose above US$68 a barrel and the dollar was up against the yen.

Improving company outlooks and economic data coupled with still-large amounts of uninvested cash have helped jump-start a rally in world equities that started in March but began to fade in June.

Whether the markets continue their run higher could hinge on another round of second-quarter results this week from major U.S. companies such as Visa Inc., Colgate-Palmolive Co. and ExxonMobil Corp. Big Japanese corporations also start reporting earnings this week.

Lucinda Chan, a director at Macquarie Private Wealth in Sydney, said expectations more companies will offer forecasts that suggest global demand is coming back is persuading investors to add to their positions in stocks.

"No one is running away. I think the fear of missing out is still strong, and there is this extreme appetite for risk right now," Chan said.

Tokyo's Nikkei 225 stock average added 144.11 points, or 1.5 percent, to 10,088.66, and Hong Kong's Hang Seng rose 263.43, or 1.3 percent, to 20,246.22.

Markets in Shanghai, Australia and South Korea were higher by around 1 percent or more.

Friday in New York, Wall Street added its gains.

The Dow rose 23.95, or 0.3 percent, to 9,093.24, its highest finish since Nov. 5. The S&P 500 index rose 2.97, or 0.3 percent, to 979.26.

Wall Street futures augured a stronger opening Monday.

Dow futures gained 24, or 0.3 percent, to 9,082 and S&P futures rose 3.6, or 0.4 percent, to 981.40.

Investor hunger for riskier assets extended to commodities, with benchmark crude for September delivery gaining 59 cents to $68.64 a barrel in Asian trade.

On Friday, the contract rose 89 cents.

The dollar rose to 94.82 yen from 94.74 yen.

The euro was higher at $1.4240 compared to $1.4224. - AP

Earlier report

TOKYO: Japan stocks rose sharply Monday, sending the benchmark Nikkei 225 stock index above the 10,000 level for the first time in almost four weeks.

The Nikkei shot up 173.72 points, or 1.8 percent, to 10,118.27 at the end of the morning session.

The broader Topix index added 1.3 percent to 923.82.

The Nikkei last crossed the psychologically key 10,000 line during intraday trading on July 1.

With many Japanese blue chips set to report earnings this week, hopes for improving business results lifted sentiment.

Shares of Japan's two biggest brokerages, Nomura Holdings Inc. and Daiwa Securities Group Inc., soared after the Nikkei financial daily reported that they likely returned to profits in the April-June quarter.

Nomura was up 3.3 percent at 821 yen, and Daiwa gained 3.7 percent to 555 yen. Hitachi Ltd. soared 5.4 percent to 310 yen.

The Nikkei reported that the electronics company plans to turn Hitachi Maxell Ltd. and four other listed group firms into wholly owned units.

Hitachi said the news was not based on anything it had decided or released.

The company is scheduled to release earnings Tuesday.

In currencies, the dollar held steady at 94.75 yen. The euro was trading at $1.4220 from $1.4224 late Friday. - AP


For latest news from The Daily Yomiuri, a partner with The Star in the Asia News Network, click here


Latest NYSE, NASDAQ and other business news, from AP-Wire


For latest Bursa Malaysia indices, charts and other information click here

New York Stock Exchange:
http://www.nyse.com

Nasdaq Stock Market:
http://www.nasdaq.com


For Tokyo Stock Exchange click here

  • E-mail this story
  • Print this story