Asian stocks witness follow up buying

Strong overnight cues and lack of fresh negative news support sentiments

The Asian stocks went up smartly today, witnessing follow up buying after gains in last session with Japan and Australia leading the broad markets on exuberant overnight US cues and strength in commodity prices. The lack of further negative news on the Eurozone debt trouble continued to fuel the risk appetite in the markets and recent gains in Euro also augured well for risk appetite. The Spanish government denied media reports stating that the country is asking a credit line from the European Commission and IMF, ensuring that there is no further addition to the Eurozone debt worries. However, the mid day trades seemed to reflect a dash of moderation as the DOW futures slipped 36 points and dollar neared 1.2300 against the Euro.



The Australian equities closed on a positive note with following strong closing on Wall Street in the previous session on bargain hunting amid optimism about economic recovery. Strong commodity prices augured well for the miners and the oil refiners. The benchmark S&P/ASX200 Index added 54.00 points, or 1.20% and closed at 4,559, while the All-Ordinaries Index ended at 4,572, representing a gain of 54.50 points, or 1.21%.

On the economic front, a report jointly released by the Westpac Bank and Melbourne Institute revealed that a leading indicator of the Australian economy continued to surge ahead in April despite moderation in the pace of growth. As per the report, the leading index rose 7.6% on an annualized basis in April, well above the long-term trend of 3%. In March, the annualized rate stood at 8.8%, a twelve and a half year high.

In Japan, the Nikkei Stock Average rose 1.8% to 10,067.15, finishing above the 10,000-mark for the first time since May 20. Japanese exporters with high exposure to the Euro zone jumped after the euro touched its highest level against the yen since June 4. A drop in the yen augurs well for the exporters by booting the earnings.

In Mumbai, stocks had a volatile outing but mostly stayed in green. The recent jump in the domestic inflation figures cut the risk appetite to some extent and the markets did not advance as rapidly as the Asian indices did. The BSESENSEX ended at 17462.87 points provisionally, adding 50 points or 0.29% with the automobiles and information technology shares outperforming.

In other markets, South Korea's Kospi closed 0.9%, Singapore's Straits Times Index gained 1.0%, New Zealand's NZX 50 gained 0.7% and Philippine stocks ended 0.8% higher. Markets in China, Hong Kong and Taiwan were closed for the Dragon Boat Festival holiday.

In commodities, crude edged up above $77 in early moves but drifted lower as traders locked in profits ahead of the US weekly inventories data. The commodity was last seen quoting at $76.69, down 25 cents from the previous close. Gold bounced off the lows and managed to gain a couple of dollars to linger just under $1240 an ounce.