Bulls on a high in Asia

Benchmark indices gain amid across the board surge in global manufacturing activity

Bulls held an upper hand in the Asian markets today with the sharp surge witnessed in the global manufacturing activity yesterday being the primary theme to shape up the sentiments. Commodities continued to hog the limelight as the US dollar slipped from 10-week highs an extremely strong show by the US stocks overnight ensured that most of the Asian indices end with sound gains. The recovery in manufacturing activities across the globe and improvement in US job conditions are spurring expectations for expansion in the global economy. The prospect of quantitative easing in Europe to calm the worries about the debt scenario of the peripheral European nations also acted in bull's favor.



The Purchasing Managers Index (PMI) of China's manufacturing sector rose to 55.2 percent in November, up 0.5 percentage points from October, according to the Federation of Logistics and purchasing yesterday. The figure marked an increase for the fourth consecutive month and the 21st straight month that the index was above 50 percent, connoting economic expansion.

Europe's manufacturing industries also expanded at the fastest pace in four months in November, led by Germany, the region's largest economy. A gauge of manufacturing in the 16-nation euro area advanced to 55.3 from 54.6 in the previous month, according to a survey from London- based Markit Economics.

In the US, private sector employment growth showed marked improvement and the Federal Reserve released a report reaffirming signs of a recovery. U.S. payrolls rose by 93,000 in November, according to the data. The Institute for Supply Management reported yesterday that manufacturing in the U.S. expanded for a 16th straight month in November.

The US Fed also reported that conditions in its 12 districts continued to improve based on a continued recovery in both the service and manufacturing sectors. The report also showed that hiring expanded in most districts, further accentuating the buildup in recovery momentum for the U.S. economy.

These pointers pushed US stocks across the board as investors welcomed good news from Europe, China and the US. The Dow Jones Industrial Average jumped by 249.76 points, or 2.27%, to close at 11,255.78, its largest gain since September 1 and its sixth biggest one-day jump this year.

In Japan, stocks gained sharply in tune with the global cues. The latest data out from Finance Ministry yesterday showed capital spending excluding software rose 4.8%, ensuring that the near term outlook for the economy remains steady. The benchmark Nikkei 225 index vaulted right from the start to end at 10168.52, up 180.50 points or 1.81% on the day.

The Australian stocks jumped as an early break above 4600 point mark trigged a fresh wave of buying for the benchmark S&P/ASX200. All sectors of the Australian market were higher, with the heavyweight financial and resources stocks adding the most to ensure that the benchmark index closed at 4676.20, up 89.60 points or 1.95%. .

In China, stocks continued to flare up on the upbeat global economic data. China's shares ended higher Thursday, led by resource companies. The benchmark Shanghai Composite Index gained 20.16 points or 0.7% to close at 2843.61.

In Mumbai, the key benchmark indices edged higher in volatile trade as a slew of recent strong economic data, lower inflation and higher global stocks, helped keep sentiments firm. The market gained for the fourth straight day. The BSE 30-share Sensex was provisionally up 136.74 points or 0.69%, off close to 100 points from the day's high and up close to 70 points from the day's low. The barometer index BSE Sensex closed below the psychological 20,000 mark after flirting with that level throughout the day. The 50-unit S&P CNX Nifty provisionally settled above the psychological 6,000 mark after flirting with that mark throughout the day.

On the economic front, India's merchandise exports rose 21.3% to $18 billion in October 2010 over October 2009, boosting hopes that the country may be able to reach the $200 billion target fixed for the current fiscal. Imports during the period grew by 6.8% to $ 27.68 billion, leaving a trade deficit of $9.72 billion, data released today, 1 December 2010, showed.

In other markets, South Korea's Kospi added 0.9%. Hong Kong's Hang Sang gained 0.9% while Taiwan's TAIX surged 0.8%. In currency markets, the euro edged up against the US dollar though overall undertone was cautious ahead of the European Central Bank rate decision. Crude oil remained steady after massive gains last night. The benchmark WTI futures are quoting at $86.78 per barrel, up 3 cents from the previous close.