Demand for riskier assets surged today after Chinas central bank eased monetary policy further by cutting banks reserve requirement ratio by 0.5%. The Peoples Bank of China announced on Saturday that it would cut the reserve requirement ratio (RRR) for banks by 50 basis points, effective from February 24. The move is being seen as a good sign across Asian markets as it frees up capital and boosts liquidity to stimulate growth.
Appetite for risky assets also underpinned on growing optimism that the Greek second bailout package would approved by eurozone finance ministers, enabling Greece to avoid a debt default. Eurozone finance ministers are scheduled to meet later today, and with Greece having fulfilled most of the requirements, including written commitments by Greeces political leaders and concrete measures to cut EUR325 million from this years budget, demanded by the European Union and the International Monetary Fund, the second bailout of EUR130 billion is likely to be endorsed.
Asia pacific stocks gained today, with the MSCI Asia Pacific index 0.8% higher late afternoon amid optimism that the euro area will contain its debt crisis and as the U.S. economy continued its recovery. Key benchmark indices in Australia, New Zealand, Taiwan, South Korea, China, Indonesia, Singapore and Japan were up by between 0.07% to 1.4%. Hong Kong market closed 0.3% down on profit taking. Indian market closed for holiday.
European markets holding initial gain. Around early morning, the FTSE 100 index of leading British shares rose 0.76% at 5,950.1, Germanys DAX added 1% to 6,915.76, and the CAC-40 in France advanced 0.9% at 3,471.33.
The U.S. market is closed today on account of a public holiday.
Back to cover countrywide performances, Australian stocks closed sharp higher on Monday, pushing up the broader All ordinaries Index and S&P/ASX200 index both by nearly 1.4%, as risk appetite for high beta assets underpinned from news China had lowered its reserve banking requirements for its banks as well as growing hopes for a second rescue package for Greece. Except telecom, all other sectoral indices were stronger, with shares of materials and energy issues led rally thanks to firmer commodity prices during weekend offshore trading, and closely followed by consumer discretionary and consumer staples on better than expected retail sales data.
Materials and resources players were sharply higher, powered by tracking surge in commodity prices. Rio Tinto advanced 2.2% to A$68.04 while BHP Billiton added 2.3% to A$36.02. Fortescue Metal grew 3% to A$5.45.BlueScope Steel declined 2.7% to A$0.365 after the Australias largest steelmaker has reported a A$530 million first half net loss for the six months to December 31 after booking one-off restructuring and impairment costs.
Consumer goods and retailers stocks surged today, supported by pleasing retail sales indicator data. The Commonwealth Bank (CBA) Business Sales Indicator (BSI) rose by 0.6% in trend terms in January, after 0.7% gains in November and December. Shares of Wesfarmers increased 1.4% to A$29.85 and Woolsworth 1.3% to A$25.17.
Telecom sector was worst performer in the S&P/ASX200 pack, falling 2.5%, mirroring plunge in Telstra. Sector bellwether Telstra erased 2.6% to A$3.32 after its shares went ex-dividend today. Telecom giant had pays out a 14c dividend to shareholders.
In Japan, the Tokyo market were ended modest higher on Monday, sending the Nikkei225 Stock Average 1.1% up to 9,485.09, a highest point since August 4, 2011, when it hit 9,659.18. Appetite for risky assets continued for five out of six trading sessions in row, thanks to weakening yen against major currency baskets.
Japanese exporters continued uptrend, fueled by yens slide against the euro and the US dollar. Sony Corp added 3.6% at 1,681 yen, Canon Inc 1.1% to and Fanuc Corp 1.1% to 14,410 yen. Machinery stocks lifted up after China eased lending curbs to boost growth. Hitachi Construction Machinery Co added 4.6% to 1,694 yen, and Komatsu 3% to 2,423 yen.
Steel and iron makers gained after Credit Suisse stating in report that Japanese steelmakers would be benefited from falling yen and slump in iron ore prices. JFE Holdings escalated 8.4% to 1,712 yen, Nippon Steel Corp 5.2% to 224 yen, and Sumitomo Metal Industries 4.6% to 161 yen.
Otsuka Kagu surged 10.4% to 889 yen after the furniture retailer announced a share buy back plan. The company also forecasted to post net income of 918 million yen in 2012 from 203 million yen a year earlier.
All Nippon Airways Co. erased 1.2% to 248 yen. The airline carrier announced plans to boost international capacity by 22% in the two years from April 1. The carrier company also it would slash costs by 100 billion yen as it gears up for rising competition.
Okabe Co. shed 2.6% to 406 yen after the building and structural metal materials producers said its net income fell 1.5% to 2.18 billion yen in the year ended December 2011, 13% short of its forecast of a 2.49 billion yen gain. Okabe expected that company net income would rise by around 17% to 2.54 billion yen in 2012.
Making headline today, Standard & Poors Corp. on Monday reaffirmed Japans sovereign debt rating at AA-, saying that while the countrys fiscal flexibility will likely continue to diminish, the rating is supported by the countrys strong external asset position.
The Ministry of Finance said on Monday that Japan recorded a merchandise trade deficit of 1.475 trillion yen in January. Exports plunged an annual 9.3% to 4.510 trillion yen, while imports jumped 9.8% on year to 5.985 trillion yen. Japan posted a trade deficit of 2.49 trillion yen in 2011.
In China, the Chinese stocks trimmed initial gain to finish slight higher, with the benchmark Shanghai Composite Index up by 0.3% to 2,363.60, as lingering concerns about slowing domestic economic growth curtailed most of initial gain driven by hopes of liquidity improvement after Chinese monetary eased over the weekend.
6 of 10 SSE sectoral sub-indices ended above the boundary line, with shares of banks and financials and Mainland realty players gained the most after China loosened the Reserve Requirement. Materials and recourses and oil & coal issues also ended higher following surge in crude oil futures and base metals prices.
The Peoples Bank of China announced on Saturday that it would cut the reserve requirement ratio (RRR) for banks by 50 basis points, effective from February 24. The cut will pump about 400 billion yuan into the system. The central bank said last weekend that it would maintain a prudent monetary policy as the country faces pressure to support growth and contain inflation.
China Iron and Steel Association (CISA) expects Chinas daily average crude steel output amounted to 1.7 million tonnes for the first ten days of February, an increase of 1.91% from the last ten days of January. Data showed major steel enterprises produced an average of 1.56 million tonnes of crude steel per day in the first ten days this month, up 5.55% from the preceding ten days.
In Hong Kong, the Hong Kong market fell during afternoon trade, erasing entire morning gain, weighing down the Hang Seng index by 0.3%, as investors indulged in profit booking after the benchmark index surged to fresh six and a half months high early today.
HK market started todays trading sharp higher and managed to hold early gain throughout morning after fueled by news that the Chinese central bank cut the Reserve Requirement Ratio for commercial banks. The Peoples Bank of China announced on Saturday that it would cut the reserve requirement ratio (RRR) for banks by 50 basis points, effective from February 24. The move is being seen as a good sign across Asian markets as it frees up capital and boosts liquidity. But investors opted for materializing recent profit during late afternoon amidst cautious ahead of the Eurozone Finance Ministers meet later today to give its verdict on the Greek bailout. Investors are keeping finger crossed on Euro group ministers final decision on the second bailout package for Greece at their meeting in Brussels later in the day. Many of the investors are expecting that European finance ministers will approve a new bailout package for Greece, although some are still more cautious.
The Census and Statistics Department (C&SD) released the Consumer Price Index (CPI) figures for January 2012 on Monday. According to the Composite CPI, overall consumer prices rose by 6.1% in January 2012 over the same month a year earlier, larger than the corresponding increase (5.7%) in December 2011. After netting out the effects of all Governments one-off relief measures, the year-on-year rate of increase in the Composite CPI (i.e. the underlying inflation rate) in January 2012 was 6.7%, also larger than that in December 2011 (6.4%).
The larger increase was mainly attributable to the difference in the timing of the Lunar New Year, which occurred in January this year but in February last year, resulting in a surge in the charges for package tours, the costs for meals bought away from home and the prices of other fresh sea products in January 2012.
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