Asian markets higher on stimulus rumors

Asian markets ended higher in Friday trading as expectations of impending stimulus outweighed concerns over Greek elections this weekend.

A good day of trading means a great night for Hong Kong

Although concerns over the fiscal stability of European countries like Italy, Spain, and Greece continue to affect markets worldwide, rumors of increased economic stimulus from both the United States and China pushed Asian markets to their best weekly finish in five months.

According to Terrace Chum , a fund manager for Manulife Asset Management in Hong Kong, “there’s quite a high chance that the U.S. may do more easing. People are expecting an interest-rate cut in China.”

The strongest performer amongst the major Asian markets was Hong Kong’s Hang Seng exchange ( EWH , quote ). The Hang Seng jumped an incredible 426 points, or 2.26%. The index’s star performers included the Agricultural Bank of China and retailer Esprit. The latter had previously suffered a horrendous week, losing 32% of its market capitalization as a result of the resignation of its chief executive officer and its considerable exposure to Europe. However, the stock rebounded 9% on Friday as the firm’s new management team confirmed its commitment to the company’s transformational strategy.

While such a strong performance was surely welcomed by investors in the Special Administrative Region, the sustainability of the rally remains unclear. Half of the day’s trading gains came in the last hour of trading, leading to speculation that this may be a rally based on technicals and not fundamentals.

Elsewhere around Asian markets, exchanges were higher, but none rallied to the same extent as Hong Kong. Taiwan’s Taiex ( EWT , quote ) ended up 1.14%. This represents the highest close for the exchange since May 31 .

At the time of writing, the Bombay Sensex ( INDY , quote ) was up more than 1 percent in late afternoon trading in Mumbai. Indian traders are hoping for an interest rate cut from the Reserve Bank when they meet on Monday. While an interest rate cut, especially if it’s larger than the expected 25 bps, could see Indian markets move higher in the near term, lowered rates do little to obviate the Indian economy’s structural problems .

The Shanghai Composite ( FXI , quote ) had a volatile day of trading. The exchange started the day up more than half a percent, then fell to down roughly half a percent, before closing the day up half a percent.

The Japanese Nikkei 225 ( EWJ , quote ) was not invited to the Asian markets party today, finishing just about flat on the day. Although the Nikkei opened sharply higher, the exchange gave back almost all of its gains to end 0.02% higher.

As has been the case for most of the week, there seems to be little fundamental data stemming from Asia that will affect American exchanges. For Friday, it’s best not to try to predict American markets based on what happened overnight in Asia.