Stocks consolidate gains in Asia

Improving global outlook keeps sentiments supported though some sell off emerges in select indices

The Asian markets ended in a positive manner today with the sentiments continuing to stay upbeat amid strong economic data from US and strong manufacturing data around the world. Activity in the U.S. manufacturing sector expanded for the seventeenth consecutive month in December, according to a report released by the Institute for Supply Management on Monday, with the pace of growth accelerating compared to the previous month. The ISM said its index of activity in the manufacturing sector rose to 57.0 in December from 56.6 in November, with a reading above 50 indicating growth in the sector.



German manufacturing activity rose the most since July though there are overwhelming signs that inflationary pressures are firming up, according to a latest survey from the Markit Economics today. The Markit/German Association for Materials Management, Purchasing and Logistics, purchasing managers' index, or PMI, rose to 60.7 in December from 58.1 in November. However, the reading was slightly down from a flash estimate of 60.9.

Further on the US front, the spending on residential construction increasing for the third straight month in November. In overnight trades, the US Stocks added substantial gains to open the 2011-trading year. The Dow flared up by 93.24 points or 0.8 points to 11,670.75- its two-year highs.

The markets started on a very good note following this in Asia. The Japanese market ended the first trading session of 2011 in positive territory, lifting the benchmark Nikkei 225 index to a 7-month high. The weakening of the local currency against the US dollar also supported sentiments. The benchmark Nikkei 225 Index rose 169.18 points, or 1.65%, to close at 10,398.

The Australian stocks closed the first trading session in 2011 on a flat note as investors eyed a continued moderation in the economic activity following the rate hikes from the Central Bank in last year. The commodity producers stayed supported but financials were the laggards as insurance stocks slumped following floods in Queens land region. The benchmark S&P/ASX200 Index dropped 2.70 points, or 0.06% to close at 4,742 50 points. On the economic front, results of a latest survey released by the Australian Industry Group in association with PricewaterhouseCoopers revealed that manufacturing activity contracted for a fourth straight month during December in the country. The survey index reading for December fell 1.3 points from November to 46.3.

In China, markets rose sharply given the strong global outlook and ideas that the inflationary pressures in the country could be waning after the latest spree of measures. China's Shanghai Composite Index added 1.6% to close at 2852 points.

In Mumbai, the local markets snapped four-day rally to close modestly lower. The key benchmark indices edged lower in volatile trade, snapping last four days gains as profit taking emerged after indices struck seven-week closing highs on Monday, 3 January 2011. Index heavyweight Infosys Technologies hit record high while another index heavyweight Reliance Industries jumped more than 2%. PSU OMCs fell while oil exploration firms rose on firm crude oil prices. IT, FMCG and healthcare stocks rose. Interest rate sensitive banking and realty stocks skidded. The BSE 30-share Sensex was down 62.33 points or 0.3%, up close to 150 points from the day's low and off close to 35 points from day's high. The market breadth was negative.

In other markets, the Straits Times in Singapore added 0.45%, Seoul Composite in South Korea gained 0.73% while the Taiex in Taiwan dropped 0.31%.