HONG KONG (MarketWatch) — Japanese stocks soared Tuesday, towering over other Asian markets as Tokyo investors returned from a four-day weekend played catch-up with central-bank decisions, strong U.S. jobs data and a weaker yen.
Australian stocks sharply narrowed their early losses after the country’s central bank cut the policy interest rate by a quarter percentage point to 2.75%, surprising most economists who had expected no change.
Japan’s Nikkei Stock Average JP:NIK+3.38% soared 3.4% to 14,153.36, topping the 14,000-point level for the first time since June 2008, while the broader Topix indexJP:I0000+3.00% gained 2.9%. The Nikkei was on course for its best percentage gain in more than three months.
The jump came as the market reopened for the first time since Thursday, reacting to developments in the interim, including the European Central Bank’s quarter-point rate cut, the Federal Reserve’s commitment to cut or increase its monthly bond purchases as required, and better-than-expected data on U.S. nonfarm payrolls.
The U.S. dollar USDJPY-0.27% also moved back above the 99-yen level, staying within reach of the psychologically important ¥100 level, after trading under ¥98 during last Thursday’s Japanese stock session.
“A further widening in the U.S. yield advantage over Japan will be required to push [the dollar’s rate against the yen] higher, especially as recent flow data have shown both Japanese investor repatriation and net foreign buying of Japanese portfolio assets,” Crédit Agricole head of global markets research Mitul Kotecha said.
“Despite these inflows, we expect a break [above] ¥100 to occur very soon, with appetite for foreign assets from Japanese [life insurers] and government pension funds, providing much of the ammunition for a sustained move higher,” Kotecha said.
Shares of Toyota Motor Corp. JP:7201+3.88%TM+0.10% jumped 4.6% a day after the Nikkei newspaper reported the auto giant was expected to report a more-than-tripling of its group operating profit for the year ended March 31, exceeding the forecast it issued in February.
Also leading the charge among exporters, shares of Nissan Motor Co. JP:7201+3.88%NSANY-1.39% spiked 4%, Sony Corp. JP:6758+6.70%SNE-0.17% surged 6.3%, and Nintendo Co. JP:7974+2.56%NTDOY-0.15% added 2.5%.
Meanwhile, the Shanghai Composite Index CN:000001+0.20% was mildly higher and Hong Kong’s Hang Seng Index HK:HSI+0.29% edged up 0.1% in choppy trade, after an early struggle to extend the gains they had recorded in the previous session.
On the downside, South Korea’s Kospi KR:SEU-0.36% slipped 0.2%.
Australia pares losses after cut
Over in Sydney, the S&P/ASX 200 AU:XJO-0.24% erased most of its losses after the Reserve Bank of Australia’s monetary-policy decision, and was down 0.1% in afternoon trade.
Matthew Sherwood, head of investment market research at Perpetual, said the RBA’s decision came as downbeat recent data on the Australian economy clearly showed there was room to cut rates.
“This is unlikely to be the last cut either. ... The domestic reporting season was indicative of the softness in the real economy, and with financial conditions remaining tight and monetary policy being less effective in a deleveraging cycle, there is a clear need for lower rates,” Sherwood said.
Banking stocks pared their losses after the rate cut, while some insurers advanced. Australia & New Zealand Banking Group AU:ANZ-1.02%ANZBY-1.75% slipped 0.1%, well off the day’s lows, while QBE Insurance Group Ltd. AU:QBE+1.70%QBIEY+0.58% rose 1.9%.
Meanwhile, shares of Billabong International Ltd. AU:BBG0.00%BLLAF0.00% were halted in Sydney at the surfwear retailer’s request, saying the move was related to possible transactions involving the company. The halt will be in effect until Thursday or whenever the company makes an announcement. Billabong has been in talks with potential buyers.
Weakness in financial stocks limited gains in Hong Kong, with Agricultural Bank of China Ltd. HK:1288+0.27%ACGBY0.00% losing 0.3% and China Construction Bank Corp.HK:939-0.15%CICHY0.00% dropping 0.4%.
Heavyweight HSBC Holdings PLC HK:5-0.23%HBC+0.14% moved in a narrow range around Monday’s closing level ahead of its quarterly results later in the day.
The performance in Shanghai and Hong Kong came as markets awaited the release of a slew of Chinese economic data, starting Wednesday. China will release its monthly trade data Wednesday, followed by inflation numbers a day later.
Figures released recently from the National Bureau of Statistics and HSBC showed Chinese economic activity had cooled in both the manufacturing and services sectors in April.
Investors have moved from consumer staples and other defensive sectors that outperformed the first four months of the year into the worst performing sectors, namely technology, energy and basic materials.
Financials and technology fared best and utilities and consumer staples led the declines on the S&P 500 indexSPX+0.19%, which added 3.08 points to 1,617.50, surpassing Friday’s record close.
The Dow Jones Industrial AverageDJIA-0.03% fell 5.07 points to 14,968.89, with 16 of its 30 components declining.
Dow componentIntel Corp.INTC-0.21% shares edged lower after the chip manufacturer’s McAfee security unit offered to purchase Finland’s Stonesoft OyjFI:SFT1V-0.23% for $389 million.
The Nasdaq CompositeCOMP+0.42% rose 14.34 points to 3,392.97.
For every two shares that fell, roughly three gained on the New York Stock Exchange, where 619 million shares traded. Composite volume topped 3 billion.
The cost of oil rose, with crude futures CLM3-0.76% up 55 cents at $96.16 a barrel on the New York Mercantile Exchange.
Humana Inc. HUM+2.11% rose 2.1% after J.P. Morgan upgraded shares of the provider of Medicare coverage to overweight from neutral.
Tyson Foods Inc. TSN-3.33% slid 3.3% after the meat processor reported second-quarter sales and profit below market expectations.
Shares of Canada’s Barrick Gold Corp. CA:ABX+1.54%ABX+1.75% climbed along with the price of gold, with futures for June delivery GCM3-0.70% up $3.80 at $1,468 an ounce.
BMC Software Inc. BMC0.00% shares were unchanged after the software maker said it had agreed to be purchased for about $6.9 billion in cash by a private investment group led by Bain Capital LLC and Golden Gate Capital.
Cliff Natural Resources Inc. CLF+5.52% gained 5.5% after FBR Capital Markets upgraded the iron-ore producer to outperform from market perform.
In Europe, stock trading volumes were slim with the United Kingdom closed for a public holiday.
Stocks finished last week with a blockbuster session, with the Dow industrials ending at a record close of 14,973.96, a gain of 142.38 points, while the Standard & Poor’s 500 index SPX+0.19% for the first time closed above 1,600. The gains came after the Labor Department reported Friday that the U.S. economy created more jobs than expected in April and the unemployment rate declined. Also: See lessons from past Dow milestones