Gains trickle in Asian stocks

Markets end mostly higher as buying support emerges on hopes of steady earnings growth and helps major benchmarks recoup their losses from the previous session

The Asian markets ended mostly higher today as buying support emerged on hopes of steady earnings growth and helped the major benchmarks recoup their losses from the previous session. However, the sentiments remained subdued as investors eyed the lack of credible action for raising the US debt ceiling. The US Treasury Department has said that a deal must be struck by August 2 or the United States would be at risk of temporarily not being able to meet commitments such as paying interest on debt, Social Security or paying government employees. The DOW fell in overnight trades, giving up 0.70% and safe havens like Gold and Swiss franc rallied. Indian equities turned the other way though as the central bank hiked the interest rates by a much wider 50 basis points. The Euro surged and DOW futures gained slightly in Asia, helping lift up the momentum.



In Australia, markets gained on a steady upside movement in commodity prices. Investors entered long in the banking and mining issues after deep losses in the last session and the benchmark S&P/ASX 200 index added 42.9 points to close at 4,573.3. On the economic front, Reserve Bank of Australia Governor Glenn Stevens stated that a stellar rise in household savings over recent years has been one of the biggest adjustments of its kind in the country's history. He added that the fast pace of balance-sheet repairs implied that a return to more normal levels of spending could be close at hand. Consumer spending has been muted in 2011 as rapid structural changes in the economy - brought on by surging commodity prices and a high Australian dollar - have shaken confidence, Stevens said.

In China, stocks managed to erase some of the sharp losses yesterday amid steady cues from the Asian peers. The equities in China had slumped in the last session with railway shares taking a beating after a deadly bullet-train accident. The Shanghai Composite Index had slumped nearly 3% to close at to 2,688.75 after the accident yesterday. However, the index edged higher today, gaining the 2700 levels and closing at 2703.03 levels, up 14.28 points or 0.53%.

In Japan, impressive earnings growth forecasts helped stocks witness a good outing even as the Japanese yen remained at a very strong level. The Nikkei 225 rose 0.5% to 10,097.72 at the 3 p.m. close in Tokyo. The yen hovers around 78 mark against the US dollar and remains a key determinant of the export competitiveness of Japanese exporters. Recently, Bank of Japan Governor Masaaki Shirakawa remarked that the yen's rise against the US dollar and other major currencies would further weaken the Japanese economy, which has already been struggling under negative impact from the March earthquake and tsunami.

In India, the markets slumped after RBI hiked interest rates steeper than market expectations. The central bank hiked its key policy rates by 50 basis points today in its first quarter review of its monetary policy. The repo rate is now placed at 8% while the reverse repo rate is at 7%. The BSE sensex pared gains after hitting 2-1/2-week high at the onset of the trading session and was firmly clutched in a bear hold throughout the session as the interest rate sensitive auto, realty and banking stocks led the decline. The BSE index Sensex plummeted by 369 points or 2% to close at 18501.76 points.

In other markets, the Straits Times index in Singapore added 0.47%, the Taiwan Weighted index in Taiwan closed up 1.28% while the Seoul Composite index in South Korea gained 0.58%. Commodities were mixed with crude oil holding above $99 per barrel for the WTI futures though Gold backed off from its all time highs on gains in equities. The yellow metal quotes at $1609.40, down $2.80 per ounce on the day.