Strong performances by the Dow and S&P 500 boosted Asian stocks. The Dow gained 1.99% while the S&P 500 jumped 2.25%. U.S. equities rose Thursday on the release of corporate earnings reports that were largely positive. Caterpillar Inc.’s second-quarter net income jumped 91% to $707 million, up from $371 million in 2009. 3M also reported a higher second-quarter profit in 2010 with net income totaling $1.121 billion, up from $783 million one year earlier. AT&T, Microsoft, and United Parcel Service also released earnings reports that exceeded investor expectations. (See RGE CI: Another Strong Quarter for U.S. Equities Earnings in Q2 2010?)
While the U.S. earnings were encouraging, the effect of the EU stress test results remains to be seen. The results are scheduled to be released today, July 23, 2010. (See RGE CI: EU Stress Tests of 91 Banks: Awaiting the Results)
The MSCI Asia Pacific index fell 0.1% to close at 115.56.
The MSCI Asia Apex 50 jumped 10.78 points or 1.47% to close at 744.28.
In Japan, the NIKKEI 225 closed at 9430.96, up 2.3% from Thursday’s close. The NIKKEI 225 had experienced five consecutive losing sessions prior to Friday’s gains.
The Hang Seng jumped 1.1%. All sectors gained Friday led by basic materials (up 3.12%) and consumer services (up 2.18%).
China’s Shanghai Composite gained 0.4% and has gained 6.1% for the week, the biggest weekly gain for the index in 2010. Also, the Chinese government has been active in their efforts to control the real estate markets. According to a Bloomberg report, Nikko Cordial Securities Inc. claimed that property prices could fall 30% with economic growth sliding below 8% in response to the government’s actions, which include increasing down payments and mortgage rates to curb demand.
The Indian SENSEX 30 closed at 18,130.98 rising 0.1%. Wipro Ltd., an Indian software exporter, reported a quarterly income of $281M.
In Australia, the S&P/ASX 200 climbed 1.91%.
South Korea’s KRX 100 rose 1.53%.
On currencies, the Aussie dollar was trading at 1.120, down 0.45% against the dollar while the yen was quoted at 87.190, down 0.52% against the dollar. The Kiwi also weakened losing 0.67% to the dollar; it was trading at 1.379. The renminbi stayed flat while the rupee and rupiah showed gains of 0.37% and 0.06% respectively.
The prices for 10-year sovereign bonds decreased leading to higher yields in Japan, China, and Australia. Yields also rose in New Zealand, Hong Kong, and Indonesia indicating an increased tolerance for risk among investors.
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