On Tuesday Asian shares broadly recovered led by the Australian market which rose after six straight days of losses.
The S&P/ASX 200 rose 1.34%, while Hong Kong’s Hang Seng Index gained 0.89% and South Korea’s Kospi edged 0.65% higher.
The Shanghai Composite Index was down 0.25%. Japan’s market is closed for a holiday.
Earlier Tuesday, the Reserve Bank of Australia kept its cash rate target unchanged at a record low of 2.0%, referring to firmer prospects for economic growth.
The Asian shares rebounded from losses
after two indices of Chinese factory activity, released Sunday and
Monday, signaled a contraction in October. Market players continue to weigh
China’s uncertain prospects for achieving its growth target of about 7%
by year-end turning against the likelihood of more stimulus. However, both readings hinted at improvement, pointing to some stability in the economy, analysts say.
Moreover, weak manufacturing data out of the U.S. on Monday supported the view that the Federal Reserve won’t raise short-term interest rates until 2016, a move that will raise borrowing costs for businesses around the world and boost the U.S. dollar against other currencies.
Movers
Shares in Australia were recovering from their sharpest percentage drop in more than a month on Monday, as investors grew worried over the earnings firepower of the country’s biggest banks.
The S&P ASX 200 lost 1.4% Monday, with Macquarie Group Ltd. plunging 4.4% and Westpac Banking Corp. losing 2.5%. The selloff came after Australia’s major banks reported record profits for the past financial year, but cautioned future earnings results might look less appealing because of regulations requiring higher capital levels, increased competition and a jump in bad-debt levels.
A gauge of Australian financial stocks on the S&P/ASX 200 was up 1.3%. Westpac Banking and Macquarie Group were up 2.25% and 1.24% respectively.
Although Australia’s financial sector has been logging losses for more than a week, Evan Lucas, a market strategist at IG, said that banks in Australia have had a decent reporting season and that Monday’s selloff in financial stocks was overdone.
In Hong Kong, shares of Dongfeng Motor Group Co. rose 4.2% while
Dongfeng Automobile Co. fell 4.52% in Shanghai. China’s antigraft
regulator said on Monday that it is investigating Zhu Fushou, president of
the state-run auto maker Dongfeng Motor Corp. for alleged corruption.
The company is China’s second-largest auto maker by sales and has
partnerships with several foreign car producers like Japan’s Honda Motor
Co. and Nissan Motor Co.
Instant-foods maker Tingyi (Cayman Islands) Holding Corp. was up 1.73% while consumer-products holding company Hengan International Group Co. rose 3.31%.
Shanghai-listed Deluxe Family Co. and Daheng New Epoch Technology Inc. dropped by the maximum daily 10% allowed by the authorities for the second straight day. Both stocks were held by Ze Xi Capital, whose chief executive was arrested for alleged illegal trading, and had risen by the maximum 10% on several trading sessions in the recent past.
Japan Post Holdings Co. will launch its initial public offering on Wednesday, when markets reopen. This is going to be the country’s largest privatization in decades, offering investors a chance to buy into a company with more than $2 trillion in assets.
