Asian Markets, Fundamentals

Asian Stocks Rebound on Higher Commodity Prices, Optimism for Global Growth

Asia Session Key Developments

• Hong Kong Manufacturing Expands for Third Month
• Australian Retail Sales Falter
• Gold Hits Record High of $1,088.50/oz in NY Trade

The Asian stock markets bounced back on Wednesday, with the Hang Seng halting the three-day slide, while the Nikki added 0.42% following the National Culture Holiday. Meanwhile, manufacturing in Hong Kong expanded for the third consecutive month in October, with the PMI reading rising to 54.6 from 51.8 in the previous month, and firms may continue to ramp up their rate of production over the coming months as global trade conditions improve. Moreover, service-based activity in Australia expanded for first time since June, with the PMI advancing to 54.8 in October from 49.3 in the previous month to mark the highest reading since March 2008, while retail spending unexpectedly slipped 0.2% in September after growing 0.7% in the month prior, while sales excluding inflation fell 0.4% in the third quarter amid expectations for a 0.5% decline. At the same time, building approvals rose 2.7% after tumbling 0.9% in the previous month, with the annualized rate jumping 11.7% from the previous year to top forecasts for a 8.2% rise.

Nikkei 225                          9,844.31

The Japanese equity markets traded higher on Wednesday after being closed in observance of the National Culture Holiday, with the Nikkei adding 41.36 points (0.42%) to end the day at 9,844.31. Consumer services rose 2.12% to lead the advanced, following by a 1.10% rise in oil & gas, while technology slumped 1.28% to taper the advance. Shares of Sumitomo Metal Mining Co increased 2.57% following the rise in commodity prices, while Nippon Oil gained 2.31% after Macquarie Group raised its rating on the stock to “outperform” from “underperform.” At the same time, Tokyo Election slipped 5.09% as Morgan Stanley lowered its outlook for the semiconductor market, while Japan Steel Works surged 10.04% to mark its biggest rally since November 2008 as the first raised its full-year net income outlook on the back of lower costs.

Hang Seng                        21,614.77

The Hang Seng advanced for the first time in three days, with the index rallying 374.71 points (1.76%) to end the session at 21,614.77 as all 9 components pushed higher on the day. Consumer goods jumped 2.82% to lead the advance, followed by a 2.77% rise in oil & gas, while consumer services gained 2.59% on the day. Shares of PetroChina increased 3.55% on the back of higher oil prices, with Cnooc tipping 2.95% higher, while China Overseas Land & Investment rose 2.19% after the Ming Pao newspaper said the firm increased its purchases in the Kowloon Tong district. Moreover, China Petroleum & Chemical Corp added 1.06% as CFO Wang Xinhua said the firm may post a profit in the fourth quarter, while Li & Fung advanced 2.82% as HSBC raised its rating on the firm to “neutral” from “underweight.”

S&P/ASX 200 Index           4,540.10

Stocks in Australia traded higher on Wednesday after losing ground throughout the week, leading the S&P/ASX 200 to climb 8.60 points (0.19%) to end the day at 4,540.10, with 3 of its 10 components trading higher. Shares of West Australian Newspapers rallied 6.52% as Deutsche Bank and Credit Suisse raised the their ratings on the stock, while Newcrest Mining advanced 3.21% as gold prices rose to a record high of $1,088.50/oz during the New York trade. Moreover, Harvey Norman Holdings added 2.57% as Credit Suisse hiked the rating on the firm to “outperform” from “underperform,’ while Westpac Banking Corp rose 1.42% after the firm posted a less-than-expected loss in the second-quarter.

Notable Asian Session Event Risk / Economic Releases