Asian markets rose for a second straight day yesterday as dealers picked up bargains after heavy selling through May, with confidence boosted by hopes that Greece will avoid exiting the eurozone.
Shares also received a lift on hopes that China will implement new stimulus measures to raise domestic demand and fast-track some major construction projects.
Investors, however, remained nervous by eurozone woes as attention turned to Spain, where a growing banking and borrowing crisis has raised fears the country could be forced to ask for a bailout.
Tokyo rose 0.74 percent, or 63.93 points, to 8,657.08, Seoul added 1.41 percent, or 25.74 points, to close at 1,849.91 while Sydney gained 1.14 percent, or 46.4 points, at 4,114,4.
Global markets have been in a downward spiral since May 6 elections in Greece saw anti-austerity parties – who have promised to tear up terms of a bailout package – post huge gains.
In Madrid Prime Minister Mariano Rajoy said on Monday the country was struggling to borrow as the yields on benchmark Spanish bonds soared to 6.479 percent, considered too high for governments to keep servicing their debts.
The euro bought US$1.2534 in Asian trade, against US$1.2543 in London, while it was at 99.67 yen compared with 99.95 yen. US markets were closed on Monday for a holiday.
HONG KONG: Shares rose 1.35 percent yesterday as bargain hunters moved in after several weeks of losses, lifted by hopes Chinese authorities will announce fresh monetary easing measures.
The Hang Seng Index added 254.47 points to 19,055.46 on turnover of HK$48.95 billion. Dealers took heart from a report that Beijing will introduce measures to jumpstart demand for cars.
SINGAPORE: The Straits Times Index (STI) gained 14.63 points, or 0.52 percent, to close at 2801.85 points yesterday.
Among the 30 stocks that make up the STI, there were 19 gainers, eight decliners and three unchanged.
The top three most actively-traded stocks by value were Noble Group (+3.72 percent), SingTel (unchanged) and Capitaland Ltd (+2.46 percent).
KUALA LUMPUR: Bursa Malaysia ended higher yesterday in line with the gains in most regional markets despite the Spanish bank worries, dealers said.
The FBM KLCI closed 10.38 points, or 0.67 percent, higher at 1,565.32, after hovering between 1,552.34 and 1,566.13.
A dealer said hopes for new measures to boost China’s economy outweighed worries about the health of Spanish banks and their potentials to worsen Europe’s debt crisis. He said investors were encouraged to buy oversold shares on hopes China was on the verge of taking action to shore up its economy.
In other markets:
* Taipei surged 2.89 percent, or 206.29 points, to 7,342.29.
* Manila closed 1.42 pe rcent, or 70.37 points, up at 5,023.11.
* Wellington rose 0.46 percent, or 16.04 points, to 3,478.29.
EUROPE: European equities rose yesterday following a stronger showing in Asia, where the spotlight fell on the possibility of further policy stimulus in China, although fears over Spain’s banks lent a cautious note.
The FTSEurofirst 300 was up 0.6 percent at 989.76 by 0816 GMT, having slipped into negative territory at Monday’s close, down 0.1 percent, on worry about the growing cost to Spain’s public purse of propping up the country’s lenders.
Spain’s IBEX underperformed again, off 0.6 percent, weighed down by banking heavyweights Santander and BBVA, with struggling lender Bankia restating 2011 results on Monday to reflect a EURO3.3 billion loss as the government proposed putting sovereign debt into the lender.
AMERICA: The stock market is desperately looking for good news.
On Tuesday, oil prices fell, the euro sank to a 22-month low, and the yield on the U.S. government’s 10-year Treasury note fell near a historic low after a report suggested that Spain will have more trouble repaying its debts.
But stocks rose anyway. In fact, they had one of their best days in an otherwise dreary month. Investors focused on hopes that China is poised to rev up its economic growth machine and that upcoming elections in Greece will help the country stay in the euro.
“The overriding news isn’t that great,” said Robert Pavlik, chief market strategist at investment advisors Banyan Partners. “But Greece and China are taking the pressure off the market in the short term.”
Gains in industrial stocks that depend heavily on the Chinese economy, like Caterpillar and Alcoa, helped push the Dow Jones industrial average up 125.86 points. The Dow closed at 12,580.69, up 1 percent.
China is the largest market for aluminum, which Alcoa makes, and Caterpillar recently said it is aggressively courting China to sell its construction equipment. Both stocks gained 3 percent.
It was only the fifth gain for the Dow this month. The index is down 4.8 percent for May and is headed for its first monthly loss since September. The main culprits behind the decline have been the increasing likelihood that Greece will drop out of the euro currency and a worsening of Spain’s financial condition.
Facebook plunged 10 percent to $28.84, shaving $25 billion off from the company’s market value in its first seven days of trading. The glitch-plagued IPO has drawn scrutiny from regulators and ire from disgruntled investors who had trouble executing trades.
Blackberry maker Research in Motion plunged 11 percent in after-hours trading to $10 after the company said it expects to post a loss in its first quarter amid tough competition in the smartphone business.
The Standard & Poor’s 500 index closed up 14.60 points at 1,332.42, and the Nasdaq composite added 33.46 points to 2,870.99.
U.S. markets were closed Monday for Memorial Day.
Oil prices fell below $91 after ratings agency Egan Jones downgraded Spain’s debt Tuesday. Crude oil prices have been dropping steadily from $106 four weeks ago amid signs of slowing global growth.
Analysts have been concerned that Spain and other weak European economies could drag the European Union into recession this year. It would lead to lower demand from Europe, a region that consumes 16 percent of the world’s oil. It also could harm trading partners like the U.S. and China and slow down global demand for oil.
The same worries flagged in the report sent the euro to $1.246, its lowest point against the dollar since July 2010. Investors fled to the safety of U.S. government bonds, sending the yield on benchmark 10-year Treasury note as low as 1.71 percent, near an all-time low.
Stock investors on Tuesday appeared relieved with news from Greece that a party in favor of abiding by the terms of the country’s financial rescue could win in national elections next month. That could avoid a catastrophic rift with Greece’s international creditors and keep the struggling country within the euro zone.
There was also some positive news from the beleaguered U.S. housing market. The Standard & Poor’s/Case-Shiller report found that home prices increased in 12 of the 20 cities it tracks. The increase in March from the month before was the first in seven months. It was the latest evidence of a slow recovery taking shape in the troubled housing market.
In Europe, concerns that Spain’s ailing banking sector might worsen the European debt crisis sent the Spanish stock market to nine-year lows. Other European markets rose.
Spain’s banks are sitting on huge amounts of soured investments in the country’s imploded real estate market. That has led to the recent nationalization of Bankia, the country’s fourth-largest lender. Bankia revealed last week that it needs far more money in state aid than previously expected, $23.8 billion.
Madrid’s Ibex index fell 2.3 percent and Bankia dropped another 13.6 percent.
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