Asian stocks rose yesterday to their highest level since the dark days following Lehman Brothers’ collapse last September while the US dollar fell, as a solid outlook for corporate earnings lured investors to riskier, higher-yielding assets and commodities.
European stocks were also set for a firmer open and headed for their sixth straight day of gains.
Record low global interest rates and trillions of dollars in stimulus spending appear to be helping the world recover from the worst recession in 80 years. Sentiment was also helped after CIT Group Inc clinched a last-minute US$3 billion rescue by a group of bondholders and probably esaped bankruptcy.
Aside from more company earnings reports, the highlight for global markets this week will be US Federal Reserve Chairman Ben Bernanke’s testimony to Congress today and tomorrow, especially any comments he makes on exit strategies from extraordinary actions taken to support the economy.
“We expect him to boost market confidence that the US central bank will do so in a way minimizing negative impact on price stability and the US dollar,” said Dariusz Kowalczyk, chief investment strategist with SJS Markets in Hong Kong.
“We expect consolidation of equity markets after last weeks rally, modest correction in commodities, some narrowing of corporate CDS spreads, modest rebound in Treasuries, and a small gain in the dollar,” he said in a note.
Japan’s markets were shut yesterday for a public holiday. The MSCI index of Asia Pacific stocks outside Japan rose 2 percent to its highest level since Sept. 29, putting it on track for a fifth consecutive session of gains.
Gains were spread fairly evenly across the sectors, with materials, technology and financials leading.
Hong Kong’s Hang Seng jumped 2.4 percent, supported by bank stocks.
South Korea’s KOSPI closed 2.7 percent higher, a near 10-month high, while Australia’s S&P/ASX 200 index was up 1.3 percent, boosted by higher commodity prices.
Strong earnings and positive economic reports, such as a surprising rise in US housing starts last month, helped US stocks close out their best week in four months on Friday.
Of the S&P 500 firms that have reported quarterly results so far, 71 percent have beat analysts’ expectations, 20 percent were below estimates and 9 percent were in line, Thomson Reuters data shows.
While this positive momentum has lifted equity markets, large credit-related losses at Bank of America and an unexpected drop in revenue at General Electric Co were stark reminders of corporate America’s struggle.
The US dollar and yen slid in choppy trade, as investors leaned toward higher-yielding currencies. The euro climbed 0.8 percent to ¥134.25, while the dollar rose 0.4 percent to ¥94.73.
US crude for delivery next month rose 1.1 percent to US$64.26 a barrel, after rising 2.5 percent on Friday on positive US housing data that revived hopes of a global economic recovery.
After failing twice last month to make much progress above US$71 a barrel, the front-month contract fell a week ago to a two-month low of US$58.32.
The September Brent crude contract rose 0.9 percent to US$65.98 a barrel.
Semiconductor shares in China surged yesterday after Reuters reported the US had ordered chipmaking giant Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to halt shipments of advanced chips to Chinese customers, which investors believe could accelerate Beijing’s self-reliance efforts. TSMC yesterday started to suspend shipments of certain sophisticated chips to some Chinese clients after receiving a letter from the US Department of Commerce imposing export restrictions on those products, Reuters reported on Sunday, citing an unnamed source. The US imposed export restrictions on TSMC’s 7-nanometer or more advanced designs, Reuters reported. Investors figured that would encourage authorities to support China’s industry and bought shares
FLEXIBLE: Taiwan can develop its own ground station equipment, and has highly competitive manufacturers and suppliers with diversified production, the MOEA said The Ministry of Economic Affairs (MOEA) yesterday disputed reports that suppliers to US-based Space Exploration Technologies Corp (SpaceX) had been asked to move production out of Taiwan. Reuters had reported on Tuesday last week that Elon Musk-owned SpaceX had asked their manufacturers to produce outside of Taiwan given geopolitical risks and that at least one Taiwanese supplier had been pushed to relocate production to Vietnam. SpaceX’s requests place a renewed focus on the contentious relationship Musk has had with Taiwan, especially after he said last year that Taiwan is an “integral part” of China, sparking sharp criticism from Taiwanese authorities. The ministry said
CHANGING JAPAN: Nvidia-powered AI services over cellular networks ‘will result in an artificial intelligence grid that runs across Japan,’ Nvidia’s Jensen Huang said Softbank Group Corp would be the first to build a supercomputer with chips using Nvidia Corp’s new Blackwell design, a demonstration of the Japanese company’s ambitions to catch up on artificial intelligence (AI). The group’s telecom unit, Softbank Corp, plans to build Japan’s most powerful AI supercomputer to support local services, it said. That computer would be based on Nvidia’s DGX B200 product, which combines computer processors with so-called AI accelerator chips. A follow-up effort will feature Grace Blackwell, a more advanced version, the company said. The announcement indicates that Softbank Group, which until early 2019 owned 4.9 percent of Nvidia, has secured a
CARBON REDUCTION: ‘As a global leader in semiconductor manufacturing, we recognize our mission in environmental protection,’ TSMC executive Y.P. Chyn said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, yesterday launched its first zero-waste center in Taichung to repurpose major manufacturing waste, which translates into savings of NT$1.5 billion (US$46 million) in environmental costs a year. The environmental cost savings include a carbon reduction benefit of 40,000 tonnes, equivalent to the carbon offset of over 110 Daan Forest Parks, the chipmaker said. The Taichung Zero Waste Manufacturing Center is part of the chipmaker’s greater efforts to reach its net zero emissions goal in 2050, aligning with the UN’s 12th Sustainable Development Goal. The center could reduce TSMC’s outsourced waste processing
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