Asian equities struggled this week, but the trend reversed itself today. The stock of MS&AD Insurance Group Holdings Inc., a Japanese insurance company, rose 4.35% after reporting a 29% increase in profit for the first-quarter. Genting Singapore Plc stock increased 14.06% after reporting second-quarter net income totaling $291 million after losing money in the same period last year. Asian stocks were able to post gains despite news that initial unemployment claims continued to rise in the U.S. (See RGE Critical Issue: U.S. Labor Market: Initial Unemployment Claims Climb Higher)
The MSCI Asia Pacific Index fell 1.36% while the MSCI Asia Apex 50 rose 0.36%.
In Japan the NIKKEI 225 rebounded today rising 0.44%. Eight out of nine sectors gained on the day. However, today’s gains were not enough to erase the losses occurring earlier in the week; the index was down more than 4% this week. There is speculation in Japan that the central bank could intervene to boost economic growth. According to BNP Paribas, the BoJ is likely to look for additional ways in which it can supply monetary funds to combat deflation and the financial crisis. This will provide support to the short and medium sectors of the JGB yield curve. (See RGE Critical Issue: Will Japanese Government Bond Yields Stay Under 2%?)
China’s Shanghai Composite Index jumped 1.27% with all sectors posting gains. Health care led the way as the sector advanced 2.50%. The Shanghai Composite Index lost 1.94% this week.
India’s BSE Sensex 30 advanced 0.52% on the day. Yesterday, India’s ministry of statistics released a report detailing an industrial production slowdown in June 2010 that was led by deceleration of manufacturing output to single digits (7.3% y/y) and that of electricity to 3.5% y/y, while mining output eased marginally to 9.5%. The output of basic (3.4%) and intermediate (8.7%) goods continued to slow, but the sharp deceleration in capital goods (9.7%) output into single-digits was rather alarming. Improving hiring and incomes raised consumer durables output (27.4%) while consumer non-durables continued to witness weak growth (1.3%), given the impact of high inflation on household consumption. On a month-on-month basis, industrial production grew a mere 0.1%, after falling in April and May, led by a marginal (0.6%) pickup in manufacturing output while electricity and mining output slipped. Industrial activity grew 11.6% y/y in Q2 2010 compared to 3.9% y/y in Q2 2009. (See RGE Critical Issue: India’s Industrial Activity Slows into Single-Digits: Will Domestic Demand Be a Savior?)
In Australia the S&P/ASX 200 was one of the top performing indices in the region today as it climbed 1.33%.
On currencies the yen, Aussie dollar and renminbi weakened against the dollar while the kiwi, rupee and rupiah strengthened against the dollar.
The yield on the 10-year Japanese sovereign bond decreased by 1.9 basis points. China, New Zealand and Malaysia’s 10-year sovereigns also experienced falling yields.
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