Asia’s benchmark stock index rose to the highest level in almost four months after U.S. companies reported earnings that topped analysts’ estimates and President Barack Obama said Osama bin Laden has been killed.
Komatsu Ltd., the world’s No. 2 maker of construction equipment, advanced 3 percent after Caterpillar Inc. posted better-than-estimated profit. Seiko Epson Corp., a Japanese printer maker, rose 5.7 percent after forecasting net income will jump 66 percent this fiscal year. Hyundai Development Co. surged 12 percent in Seoul after the government announced measures to aid builders and boost the property market.
The MSCI Asia Pacific Index gained 0.7 percent to 140.42 at 7:38 p.m. in Tokyo, the highest level since Jan. 19. Three stocks rose for each that fell on the gauge. The measure rose 0.5 percent last week after the Federal Reserve renewed its pledge to stimulate growth in the U.S., the world’s biggest economy, with low interest rates.
“The death of bin Laden eases some concern, but it’s hard to imagine it’ll lead to a reduction of risk in the Middle East, and so the market’s reaction may be transitory,” said Koichiro Nishio, a market analyst in Tokyo at SMBC Nikko Securities Inc. “The recovery of demand in the U.S. and other developed countries means a better environment for earnings.”
Japan’s Nikkei 225 Stock Average rose 1.6 percent to the highest level since the March 11 earthquake and tsunami. Japanese shares extended gains when the dollar strengthened versus the yen after President Obama said bin Laden was killed yesterday in a firefight with a team of U.S. operatives who raided a compound in Pakistan where he had been hiding.
Nikkei, Kospi
Pakistan’s Karachi Stock Exchange 100 Index slipped 0.2 percent. Futures on the U.S. Standard & Poor’s 500 Index advanced 0.3 percent today. The stock gauge rose 0.2 percent to 1,363.61 on April 29.
South Korea’s Kospi Index added 1.7 percent. Australia’s S&P/ASX 200 Index was little changed, recovering from a loss of as much as 1.2 percent after the nation’s currency rose above $1.10 for the first time since foreign-exchange controls were scrapped in 1983. Australia’s manufacturing contracted in April for the seventh time in eight months as the record-high currency and consumer caution hurt textile and other producers, an industry report showed today.
U.S. earnings boosted confidence in global corporate profits. Caterpillar, the world’s largest maker of construction equipment, raised its full-year earnings forecast as sales surged in developing countries. Goodyear Tire & Rubber Co., the biggest U.S. tiremaker, reported first-quarter adjusted earnings of 51 cents a share, more than quadrupling the 11-cent average estimate of analysts.
Consumer Spending
Also, a government report showed consumer spending in the U.S. climbed in March as Americans spent more on food and fuel. Purchases rose 0.6 percent after a revised 0.9 percent gain in February that was higher than previously estimated, Commerce Department figures showed on April 29.
Komatsu advanced 3 percent to 2,924 yen in Tokyo. Canon Inc., the world’s No. 1 manufacturer of cameras, climbed 2.5 percent to 3,895 yen. Toyota Motor Corp., the world’s largest carmaker, increased 1.9 percent to 3,290 yen.
Seiko Epson jumped 5.7 percent to 1,492 yen, its highest close since Jan. 19. The company forecast net income will jump 66 percent. Cosmo Oil Co., a refiner, advanced 3.4 percent to 274 yen. The company’s net income was 28 billion yen for the year ended March 31, up 56 percent from its forecast, according to a preliminary earnings statement.
‘Worries Receding’
Electric Power Development Co., Japan’s biggest power wholesaler, leapt 4 percent to 2,211 yen. The company projected full-year net income will increase 33 percent.
“In addition to U.S. companies having good earnings, Japanese companies’ earnings were not so bad. That’s improving investors’ sentiment in the market,” said Toshiyuki Kanayama, a market analyst at Tokyo-based Monex Inc. “Excessive worries about the future of the economy and companies’ earnings are receding.”
The MSCI Asia Pacific Index increased 1.3 percent this year through April 29, compared with gains of 8.4 percent by the Standard and Poor’s 500 Index and 2.9 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark were valued at 13.5 times estimated earnings on average, compared with 13.8 times for the S&P 500 and 11.5 times for the Stoxx 600.
Tax Incentives
South Korean construction companies advanced on the government’s support measures. The government said it will give tax incentives to real-estate investment trusts that buy unsold housing, and will establish a bank to purchase soured loans owed by builders and developers.
Hyundai Development surged 12 percent to 32,700 won. Daewoo Engineering & Construction Co. added 2.2 percent to 11,650 won. Daelim Industrial Co. climbed 3.7 percent to 125,500 won. South Korean shares also gained as data showed the nation’s exports rose to a record in April.
“Investors are cheering supportive measures by the government, especially given many builders had underperformed other sectors this year,” said Im Jeong Jae, a Seoul-based fund manager at Shinhan BNP Paribas Asset Management Co., which oversees about $30 billion. “Still, we’ll have to see how effective their measures are.”
Source: Bloomberg By
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