Asian markets rose strongly yesterday as investors returned from the Easter holiday in a mood to buy, encouraged by upbeat US housing numbers and overnight gains on Wall Street.
Markets in Hong Kong and Australia, both of which were closed since Thursday, surged on easing concerns about the global credit crisis that has battered Asian stocks since the start of the year.
"I think this is the beginning of a rally," said Francis Lun, a general manager at Fulbright Securities in Hong Kong. "We have gone down low enough and the market is ready for a rebound. Banks will lead the rally."
PHOTO: AFP
Hong Kong's benchmark Hang Seng index jumped 6.4 percent to 22,464.52, while Australia's S&P/ASX 200 index rose 3.7 percent to finish at 5,318.4.
Japan's Nikkei 225 index climbed 2.2 percent to 12,745.2 after closing flat on Monday and India's Sensex was up 5.5 percent in afternoon trading.
Investors were heartened by a new agreement that will give Bear Stearns Cos shareholders five times the payout that was set in a JPMorgan Chase & Co buyout deal a week ago. JPMorgan raised its offer for Bear Stearns to US$10 a share from US$2 a share. The new offer signals that investors' losses might not be as sizable as feared.
There was also optimism about the US housing sector, which has been at the heart of the credit problems. The National Association of Realtors on Monday said that sales of existing homes in the US rose 2.9 percent last month, the first gain since July.
The Dow Jones industrial average rose 187.32, or 1.52 percent, to 12,548.64 on Monday, after rising more than 260 points on Thursday, the last day of trading before the Easter weekend.
In Tokyo, electronics and trading companies were buoyed by the recent recovery in the US dollar, which was trading at ¥100.20. Last week, it dropped below ¥96 for the first time since August 1995. Gainers in Tokyo included Canon Inc, which rose 3.9 percent, and Itochu Corp, up 4.8 percent.
In Australia, banks led the market higher. National Australia Bank, the nation's largest lender, rose 5.1 percent, while Australia and New Zealand Banking Group added 5.9 percent.
Still, some analysts warned that the declines in regional markets may not be over.
"It's too early to conclude an end of the prevailing bear market," said Ernie Hon, a strategist at ICEA Securities in Hong Kong.
The Chinese market recovered from an early drop to close nearly flat, as a rally in airlines offset a continued decline in PetroChina on views the stock is overvalued. The Shanghai Composite Index rose 0.1 percent to 3,629.62.
Taiwan bucked the regional trend. Its main index slid 0.8 percent after surging 4 percent on Monday amid expectations that president-elect Ma Ying-jeou (
The Fed's move to help Bear Stearns and the housing figures appeared to alleviate some of Wall Street's concerns about souring mortgage debt and lenders' resulting hesitance to grant loans of any sort. The latest Bear Stearns deal signals that investors' losses might not be as sizable as feared.
"The reason we've rallied the last three or four days is people are saying `Hey, even if this paper is worth less than people think, the Fed is willing come in and buy it at some level,'" said Charlie Smith, chief investment officer at Fort Pitt Capital Group in Pittsburgh.
The Dow rose 187.32, or 1.52 percent, to 12,548.64, after rising more than 260 points on Thursday, the last day of trading before the Easter weekend.
Broader stock indicators also advanced. The Standard & Poor's 500 index rose 20.37, or 1.53 percent, to 1,349.88, and the NASDAQ composite index rose 68.64, or 3.04 percent, to 2,326.75.
Monday's gains followed a volatile but ultimately strong week for the markets. The Dow and the S&P each showed gains of more than 3 percent for the week, while the NASDAQ advanced more than 2 percent.
Bond prices fell sharply as investors felt less of a need for the safety of government bonds and also rushed to join the stock market rally. The yield on the benchmark 10-year Treasury note, which moves opposite its price, shot up to 3.53 percent from 3.34 percent late on Thursday, a huge advance reflecting s shift in market sentiment.
Denis Amato, chief investment officer at Ancora Advisors in Cleveland, is skeptical that Wall Street might have put its troubles behind it with the Bear Stearns deal. He said the Fed's extraordinary steps a week ago to lend aid to the struggling investment banks and accept as collateral much of the now-shunned debt was helping the market, but that investors will likely face further concerns.
"I just can't remember in my career having an instance where you know within a week what the watershed event was. Now we all know and that makes me a little bit nervous," he said of those conjecturing that the Bear Stearns deal marks the stock market's bottom.
"I'm not sure that the fundamental economics are still turned enough and that we went down enough in a lot of cases to have this be the real bottom. It may be one of many bottoms," Amato said.
SECURITY: As China is ‘reshaping’ Hong Kong’s population, Taiwan must raise the eligibility threshold for applications from Hong Kongers, Chiu Chui-cheng said When Hong Kong and Macau citizens apply for residency in Taiwan, it would be under a new category that includes a “national security observation period,” Mainland Affairs Council (MAC) Minister Chiu Chui-cheng (邱垂正) said yesterday. President William Lai (賴清德) on March 13 announced 17 strategies to counter China’s aggression toward Taiwan, including incorporating national security considerations into the review process for residency applications from Hong Kong and Macau citizens. The situation in Hong Kong is constantly changing, Chiu said to media yesterday on the sidelines of the Taipei Technology Run hosted by the Taipei Neihu Technology Park Development Association. With
CARROT AND STICK: While unrelenting in its military threats, China attracted nearly 40,000 Taiwanese to over 400 business events last year Nearly 40,000 Taiwanese last year joined industry events in China, such as conferences and trade fairs, supported by the Chinese government, a study showed yesterday, as Beijing ramps up a charm offensive toward Taipei alongside military pressure. China has long taken a carrot-and-stick approach to Taiwan, threatening it with the prospect of military action while reaching out to those it believes are amenable to Beijing’s point of view. Taiwanese security officials are wary of what they see as Beijing’s influence campaigns to sway public opinion after Taipei and Beijing gradually resumed travel links halted by the COVID-19 pandemic, but the scale of
A US Marine Corps regiment equipped with Naval Strike Missiles (NSM) is set to participate in the upcoming Balikatan 25 exercise in the Luzon Strait, marking the system’s first-ever deployment in the Philippines. US and Philippine officials have separately confirmed that the Navy Marine Expeditionary Ship Interdiction System (NMESIS) — the mobile launch platform for the Naval Strike Missile — would take part in the joint exercise. The missiles are being deployed to “a strategic first island chain chokepoint” in the waters between Taiwan proper and the Philippines, US-based Naval News reported. “The Luzon Strait and Bashi Channel represent a critical access
Pope Francis is be laid to rest on Saturday after lying in state for three days in St Peter’s Basilica, where the faithful are expected to flock to pay their respects to history’s first Latin American pontiff. The cardinals met yesterday in the Vatican’s synod hall to chart the next steps before a conclave begins to choose Francis’ successor, as condolences poured in from around the world. According to current norms, the conclave must begin between May 5 and 10. The cardinals set the funeral for Saturday at 10am in St Peter’s Square, to be celebrated by the dean of the College