Most Asian markets gained as earnings reports boosted investor confidence. While the state of the global recovery continues to be uncertain, profit increases in the second quarter eased concerns. In South Korea Hyundai Mobis, the country’s largest auto-parts maker, reported a 60% increase in profit for the second quarter. Also Honda stock rose after the company announced that it had raised its 2010 profit forecast 34%.
The MSCI Asia Pacific Index lost 0.54% to finish at 119.11 while the MSCI Asia Apex 50 rose 1.81% to close at 764.65.
In Japan the NIKKEI 225 closed at 9570.31 after rising 0.35% on the day.
Hong Kong’s Hang Seng Index jumped 1.82% to close at 21412.79.
In China the Shanghai Composite jumped 1.33% to finish at 2672.52. Investor consensus surrounding Chinese policy has boosted stocks. The Chinese government has implemented policies to cool the economy, and economic indicators such as the Purchasing Managers’ Index (PMI) point to an economy that has slowed. For example the PMI slid from 52.1 in June to 51.2 in July. Since it appears that policies have achieved the desired effect, analysts expect the government to move away from policies that restrict economic growth. (See RGE Critical Issue: How Much of a Slowdown Are Chinese PMIs Signaling?)
The Indian BSE SENSEX 30 ended the day at 18081.21 after advancing 1.19%. The Purchasing Managers’ Index increased from 57.6 to 57.3 indicating that India’s manufacturing sector grew in July. Although the Reserve Bank of India raised interest rates last week, the growth in manufacturing may signal the need for even higher interest rates.
Australia’s S&P/ASX 200 rose 48.10 points or 1.07% to close at 4541.60.
The Korean KRX 100 gained 1.43% to close at 3755.26. According to a government report, South Korean exports increased 29.6% in July from the same period one year earlier. While exports increased in July, other leading economic indicators signal the slowing of industrial production. (See RGE Critical Issue: Do South Korea’s Leading Indicators Signal Risks to Industrial Activity?)
On currencies the kiwi, renminbi and Aussie dollar each lost approximately 0.03% against the dollar. On the other hand, the yen, rupee and rupiah strengthened against the dollar.
The yields for 10-year sovereign bonds decreased in Japan, Australia and Indonesia. Falling prices on the 10-year sovereign bonds led to increased yields in China, New Zealand, Hong Kong, India and Malaysia.
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