Asian shares rise

Thursday, 9 May 2013 00:00 -     - {{hitsCtrl.values.hits}}

(Reuters): Asian shares rose to their highest in nearly two years on Wednesday, as strong Chinese trade data added to positive sentiment already fed by record highs in global equities overnight.

European stock markets were seen firmer, with financial spreadbetters predicting London’s FTSE, Paris’s CAC-40 and Frankfurt’s DAX would open up as much as 0.2%. Germany’s benchmark DAX equity index ended at a record high on Tuesday.

US stock futures were steady to suggest a calm Wall Street open after the Standard & Poor’s 500 Index  hit an intraday record high and the Dow Jones industrial average closed above 15,000 for the first time the day before.

Investors are seeing better returns from equities than bonds, which have been hit by interest rate cuts by major central banks, with the Reserve Bank of Australia becoming the latest to do so on Tuesday.

“The RBA is just playing catch-up,” said Evan Lucas, a market strategist at IG in Melbourne, noting central banks’ moves around the globe. “The major benefactors of this cut will be risk stocks as income-plays flopped on the move.”

MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.8% to its highest since August 2011, driven by a 1% gain in Australian shares to a new peak since July 2008. Hong Kong shares rose 0.6%.

“The global monetary easing is in full flight, and this will continue to push money managers into the most compelling asset out there - equities,” Chris Weston, chief market strategist at IG markets, said in a note to clients.

After last Friday’s upbeat U.S. monthly nonfarm payrolls and this week’s German industrial orders showing unexpected strength, China followed suit on Wednesday with better-than-expected trade numbers for April, further cementing the positive mood.

China’s exports and imports grew more than expected in April from a year earlier, possibly easing some of the concerns about weakness in the recovery of the world’s second-largest economy and top consumer of many commodities following a run of below-par data in recent weeks.

However, doubts remained over the strength of real demand in China and the accuracy of the figures, with some analysts suspecting exporters may have overstated their business to sneak funds into the country and avoid capital restrictions.

Separately, as the country struggles to keep rising capital inflows at bay, dealers said China’s central bank may be preparing to change the way it manages monetary policy by reintroducing bills as a liquidity management tool for the first time since 2011.

The Australian dollar reached its intraday high of $1.0193 after the data from China, its biggest export market.

Japanese stocks again outperformed their regional peers, scaling a fresh five-year high. The Nikkei stock average climbed as much as 1.7% to its highest since June 2008. Nikkei has surged more than 65% since mid-November, when Prime Minister Shinzo Abe began promising expansionary monetary and fiscal policies to revive the economy during his election campaign. As part of the policy mix known as the “Abenomics,” the Bank of Japan last month pledged to double monetary base to achieve a 2% inflation in two years.

“Economic indicators have yet to show clear impact from Abenomics. That said, investors appear ready to give new policies the benefit of the doubt for a few more months,” Morgan Stanley said in a research.

Global equities, particularly in the United States, have remained robust despite the recent signs of a patchy recovery in world growth, mainly helped by major central banks pursuing accommodative monetary policy.

A successful bond sale in Portugal also supported the upbeat mood as it indicated the country is on track to exit its bailout, bolstering views that the euro zone crisis is abating even as debt problems in the region remain far from resolved.

Gold has taken a beating in this environment. Spot gold was up 0.1% at $1,453.89 an ounce, after losing over 1% on Tuesday as holdings on gold-backed exchange-traded funds fell to their weakest since early 2009. “The continuing outflow of gold ETFs is symbolic. Money is returning to ‘normal’ financial assets such as stocks, suggesting the super-cycle of a commodities boom is over and tough times lie ahead, especially for metals,” said Bob Takai, general manager of Sumitomo Corp’s energy division in Tokyo.

“Commodities prices will be determined more by normal supply and demand balances than speculative money flows,” he said, adding that a downtrend in commodities prices will hurt resources-reliant economies.

The euro rose 0.1% to $1.3093 against the dollar. The U.S. currency eased 0.1% to 98.95 yen.

U.S. crude futures inched up 0.1% to $95.72 a barrel but Brent inched down 0.1% to $104.28.