If it is Wednesday in Asia It Must Be Tuesday in the US
Asian exchanges recovered from morning weakness today to trade mostly higher, with Japanese stocks leading the advance. After a so-so start, Japan’s Nikkei Stock Average rose 0.8% as the dollar extended its recent gains against the Japanese currency.
South Korea’s Kospi traded up 0.1%, Australia’s S&P/ASX 200 rose 0.2%, and the Shanghai Composite Index traded up 0.5%. Whereas Hong Kong’s Hang Seng remained lower, however, trading down 0.1%.
Stocks dipped in early trading after doubts over the durability of the latest Greek rescue plan and an increase in oil prices to a nine-month-high settlement later took the wind out of Wall Street’s sails, with the main indexes closing near Friday levels
China’s manufacturing activity continued to contract in this month as export orders weakened, HSBC said today, in a further sign the eurozone crisis is hurting demand.
HSBC’s preliminary purchasing managers’ index rose to 49.7, the highest level in four months, from a final reading of 48.8 in January released in a statement.
But while the figure marked an improvement it still remained below 50, indicating the sector is contracting.
“With a meaningful rebound of domestic demand not in sight, external weakness is starting to bite, adding more downside risks to growth,” HSBC Chief Economist Qu Hongbin said.
Just a few days ago, China’s central bank cut the reserve requirement ratio for banks, effectively increasing the amount of money they can lend, for the second time in three months as officials moved cautiously to open the credit valves. This news will help boost the economy of most of the Asian nations that are China’s trading partners.
The world’s second largest economy expanded by an annual 9.2 per cent last year, narrowing from 10.4 per cent in 2010, and is widely expected to slow further this year, but most analysts do not expect to see a sharp reduction.
The Bank of China has pledged to “pre-emptively adjust and fine-tune” economic policy to prevent a hard landing that could trigger widespread job losses in the key manufacturing sector and trigger social unrest.
Lawmakers will likely move slowly for fear of reigniting inflation, which reached a more than three-year high of 6.5 per cent in July, and property prices, which have risen out of the reach of many ordinary Chinese.
Markets remain concerned about Greece, although they have been moving onwards.
In the US the Dow broke 13,000 for the first time since May 2008 before falling back to close flat, in a bumpy day spurred by news of a long-awaited new bailout for Greece.
Profit taking and less-than-impressive results from big companies like Wal-Mart left trade to sag and the index closed almost even, up 16.20 points (0.13 per cent) at 12,966.07.
The S&P 500 finished up a bare 1.01 points (0.07 per cent) to 1,362.24, while the tech-heavy Nasdaq Composite dropped 3.21 (0.11 per cent) to 2,948.57. The markets were closed on Monday for the Presidents Day holiday.
Stocks mainly took their cue from the long-awaited deal reached in Brussels early on Tuesday on a new bailout of Greece.
Originally posted here
