Asian Market Snapshot: Stocks Gain on Speculation Japan and U.S. Governments Will Support Growth

Asian markets traded higher after the BoJ expanded its JPY 20 trillion bank loan facility to JPY 30 billion as a strengthening yen threatens the recovery. (See RGE critical issue: Is Yen Intervention in the Offing?). Markets, however, pared back some of their gains as the size of the increase disappointed. 

The MSCI Asia Pacific Index rose 0.2% to 117 led by material producers, while the MSCI ASIA APEX 50 rose 0.9% to 740.

In Japan, stocks advanced as the central bank increased the size of its liquidity facility. The Nikkei 225 gained 1.8% to 9,149. Technology (up 2.64%) and industrials (up 1.94%) led the gains. Canon rose 2.4% while Honda gained 1.6%.

In Hong Kong, stocks also gained led by basic materials (up1.71%) and technology (up 1.51%). The Hang Seng Composite gained 0.7% to 20,737. China Shenhua gained 1.77% while Cnooc rose 1.67%.

In mainland China, stocks advanced led by commodity producers and consumer stocks. The Shanghai SE Composite was up 1.6% to 2,653. Consumer stocks rose after news reports that officials expect consumer prices to reach a peak of 4% this year in September. Jiangxi Copper jumped 5.4%.

In India, the BSE SENSEX 30 rose 0.2% to 18,032 led by basic materials (up 1.99%) and telecom (up 1.82%). 

In Australia, the S&P/ASX 200 index advanced 1.9% to 4,453, while in Korea the KRX 100 also rose 1.9% to 3,707. BHP rose 1.5% while Rio Tinto gained 2.5%.

In Asian trade, the yen led a broader currency gain up 0.06% to 84.62 while the Aussie dollar advanced 0.96% and the New Zealand kiwi rose 0.57%.

10-year JGBs fell with the yield up 2 bps to 1.029%. Sovereign CDS spreads narrowed across the region with the Korean 5-year spread up 7 bps to 118 bps. Corporate spreads also narrowed in the region with the Markit iTraxx Asia ex-Japan 50 IG down 2 bps to 136 bps and the iTraxx Japan index down 3.1 bps to 109 bps.

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