Asia stocks bounce as merger frenzy spurs Wall Street
Wednesday, 26 February 2014 00:00
SYDNEY (Reuters): Asian share markets regained some altitude on Tuesday courtesy of a tailwind from Wall Street which sped to historic highs amid more mergers buzz, while gold consolidated its recent rally.
The upbeat mood among investors in the United States and Europe at least helped steady markets in China after talk of credit tightening knocked property shares.
MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.5%, while Seoul gained 0.7%. Australia’s market briefly hit its highest since mid-2008 on a run of solid earnings reports.
Japan’s Nikkei bolted ahead by 1.4% to breach the 15,000 barrier, which in turn gave the US dollar a slight lift on the yen.
The market looks fairly cheap considering that Japanese corporate profits are expected to hit record highs in the year to March and are expected to rise further in the following financial year, said Ryota Sakagami, chief strategist at SMBC Nikko Securities.
Asia was following in the footsteps of Wall Street, where the benchmark S&P 500 hit an intra-day record as the Nasdaq punched to peaks last seen almost 14 years ago.
The Dow closed up 0.64%, while the S&P 500 gained 0.62% and the Nasdaq 0.69%. In Europe, the FTSEurofirst index of top regional shares added 0.64%.
A surprise improvement in German business morale added to optimism over the euro zone’s recovery and helped lift European shares. An one-notch increase in Spain’s sovereign debt rating by Moody’s Investors Service Inc also helped stocks in Europe.
The latest U.S. economic data disappointed, but once again the weakness was put down to bad weather. Instead U.S. investors focused on a string of merger and acquisition activity that is pumping cash into the market and signaling growing confidence among business leaders.
Radio frequency chipmaker RF Micro Devices Inc agreed to buy peer TriQuint Semiconductor Inc for about $1.6 billion, and Men’s Wearhouse Inc raised its offer for Jos. A. Bank Clothiers Inc by more than 10%.
U.S. Treasuries prices were steady on Tuesday after a dip overnight, with yields on the benchmark 10-year note holding at 2.74%.
The swing in risk sentiment boosted currencies leveraged to global growth with the Australian dollar up around $0.9030, having gained half a cent on Monday.
The rise in the Nikkei helped nudge the U.S. dollar up a fraction to 102.56 yen, while the euro was tracking sideways at $1.3735.
Gold was firm at $1,333.15 an ounce after touching a four-month high, but faces stiff resistance at October’s peak of $1,361.60.
Oil prices faded just a little on Tuesday after supply worries gave them a boost the session before. Brent crude dipped 11 cents to $110.53 a barrel, while U.S. oil eased 36 cents to $102.46 a barrel.