Earning reports from Canon and Chinese companies take Asian stocks higher

Asian stocks ended mostly higher on Wednesday, 28 July 2010. Better than expected earnings from Canon and a couple of China's industrial companies boosted confidence among Asian investors helping almost all major indices surge. But Indian market was the sole exception which faltered today.



Stocks in Asia were led by gains in Japanese index. Japan's Nikkei 225 Stock Average climbed 2.7% as a weaker yen boosted prospects for the country's exports. Canon, the world's largest camera maker, surged 5.7% in Tokyo as JPMorgan Chase & Co. upgraded the company after its second-quarter profit quadrupled. Other Japanese electronics makers also jumped after Canon reported Tuesday that its April to June net profit surged four-fold from the year earlier due to brisk sales of digital cameras and printers. Sony rose 2.7% and Nikon Corp. gained 3.2%.

Japanese exporters gained on optimism a weaker yen will boost the value of overseas sales. The Japanese currency depreciated to 114.44 against the euro today, compared with 113.17 at the close of stock trading in Tokyo yesterday. Against the dollar, it weakened to 88.07 from 86.98. A weaker yen boosts the value of overseas income at Japanese companies when repatriated. Honda Motor Co., which gets more than 80% of its sales abroad, gained 2.2% to 2,708 yen. Nissan Motor Co., a carmaker that counts North America as its biggest market, jumped 3.6% to 657 yen.

Among financial stocks, Mizuho Financial Group added 2.9% and Mitsubishi UFJ Financial Group jumped 3.6% to 433 yen. Fuji Heavy Industries advanced 6.8% to 488 yen after reporting total production in June climbed 70% from a year ago. Among major names, Yahoo Japan fell 3% despite 13% growth in net profit for the first quarter.

China's Shanghai Composite Index rose 2.3% on Wednesday. Hong Kong's Hang Seng Index rose 0.6%. Australia's S&P/ASX 200 Index gained 0.7%.

The statistics bureau said today in a statement on its website that profits of Chinese industrial companies in 24 regions jumped 72% to 1.61 trillion yuan ($237.5 billion) in the first half of 2010 from a year earlier. This boosted investor confidence further.

Baoshan Iron & Steel Co. gained 2.9% in Shanghai. China Erzhong Group Deyang Heavy Industries Co., an equipment supplier to power producers, gained 2.7 % to 10.27 yuan. Anhui Conch Cement Co., China's biggest cement maker, soared 10 % to 19.58 yuan in Shanghai.

Banks contributed the most to the gains in Hong Kong. HSBC Holdings Plc, Europe's largest bank, gained 2.6% to HK$80.90 in Hong Kong, while London-based Standard Chartered Plc rose 3.3% to HK$232. Hong Kong property developers fell after the government sold a building site for HK$10.4 billion ($1.34 billion).

Australian shares recovered from a knee-jerk drop immediately after data showed the country's consumer inflation for the second quarter came in weaker than expected to end higher, on hopes the RBA might not increase interest rates at its meeting next week.

In India, the key benchmark indices edged lower in volatile trade as European stocks and US index futures declined. Index heavyweight Reliance Industries fell after Q1 result as gas production is likely to stagnate at 60 million standard cubic metres of gas a day for the next 9-12 months. Two other index heavyweights - ICICI Bank and Larsen & Toubro, too, edged lower. The BSE 30-share Sensex lost 120.24 points or 0.67%, off close to 180 points from the day's high and up close to 30 points from the day's low.

Among other markets, New Zealand's NZX 50 rose 0.5% and Philippine shares climbed 0.5%. Singapore's Straits Times Index edged up 0.3%, Indonesian shares gained 0.7% and Thailand's SET Index was flat. South Korea's Kospi advanced 0.3%, Taiwan's Taiex rose 0.5%.

In foreign-exchange markets, the euro was at $1.3010, compared with $1.2997 late in New York, where it hit an eleven-week high of $1.3047 overnight. The single currency was also buying 114.48 yen, compared with 114.49 yen, while the U.S. dollar was fetching 87.96 yen from 87.97 yen.