Asian Markets up slightly on US trading, Chinese and Japanese data
Asian markets increased slightly in Wednesday trading as hopes of stimulus from American and European governments outweighed concerns over the Spanish banking bailout and impending Greek elections.
In light of the fact that Asian markets have recently been taking their cues from American and European markets, it is of little surprise that indices like the Nikkei, Kospi, and Hang Seng were all up Wednesday after the Dow Jones jumped 1.31% and the S&P 500 increased 1.17% overnight in Tuesday trading in New York.
However, most Asian markets were unable to replicate the strong move higher as the result of increased European concerns, especially since many companies on these exchanges have more European exposure than average American firms. That being said, certain exchanges benefited from country-specific, positive data.
Today’s best performing major Asian exchange was the Shanghai Composite ( FXI , quote ) which jumped 1.3% on the back of good news from China’s much-maligned housing sector . Housing sales in second-tier cities like Shenzhen, Nanjing, and Hangzhou jumped; as well, rumors abound that Beijing may loosen recently implemented housing curbs in order to stimulate the economy. While such maneuvers may not be ideal for the health of the Chinese economy over the long-term , policy initiatives designed to bolster the real estate market would likely result in a short-term bounce in Chinese equities. Chinese housing stocks like E-House ( EJ , quote ) could see a bump in Wednesday trading.
While the Hang Seng ( EWH , quote ) finished the day positive, up 0.48%, performance in the Hong Kong exchange was hindered by the 21% drop of retailer Esprit after its CEO issued his resignation. Management turnover, combined with substantial European exposure, have weighed on this stock; as a result, the Hang Seng was unable to perform as well as Shanghai, in spite of positive data from the Chinese housing sector.
The Nikkei 225 ( EWJ , quote ) also benefited from positive domestic data, although the Japanese exchange was unable to mimic the performance of its American and Chinese counterparts, rising 0.6% today. Japanese equities moved higher on data released by the government indicating that core machinery orders rose 5.7% for the month of April . Because the country’s export sector has suffered as the result of waning European demand and appreciation in the yen given its role as a safe haven currency, this datapoint could be a harbinger of strength in this beaten down sector. As a result, major Japanese industrial stocks like Nippon Steel ( NISTY , quote ) and Kobe Steel ( KBSTY , quote ) moved higher.
The South Korean Kospi ( EWY , quote ) also rose 0.3% on the back of Japanese machinery orders.
While good news from Japan and China should positively influence the ETFs that track these countries and on the ADRs in relevant industries, American markets will likely be paying attention to the latest developments from Europe.
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