HONG KONG (MarketWatch) — Most Asian markets rose on Friday as successful Italian and Spanish bond auctions and comments from the European Central Bank helped alleviate concerns about the region’s debt crisis.
Mainland Chinese stocks, which tumbled after data showing a drop in fourth-quarter foreign exchange reserves, were a notable exception.
Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK +0.33% jumped 1.4% to 8,500.02, South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 +0.33% gained 0.6% to 1,875.68, Australia’s S&P/ASX 200 index /zigman2/quotes/210598100/delayed AU:XJO +0.34% rose 0.4% to 4,195.90 and Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -0.01% gained 0.6% to 19,204.42.
ECB, BOE leave rates unchanged
The European Central Bank left its key interest rates unchanged, pausing after two consecutive rate cuts.
“Overseas equity markets fared quite well because of the sovereign-bond sales in Italy and Spain that saw related bond yields coming down. That helped to ease the fears about the euro debt crisis,” said Ben Kwong, chief operating officer at KGI Asia in Hong Kong.
On mainland Chinese bourses, the Shanghai Composite Index /zigman2/quotes/206600939/delayed CN:000001 -1.22% sank 1.3% to 2,244.58, while the Shenzhen Composite Index plunged 3.5% to 845.93. Taiwan’s Taiex slipped 0.1% to 7,181.54 on caution ahead of Presidential elections over the weekend.
The broad regional gains came as U.S. stocks ended with modest gains Thursday. The euro also appreciated versus the dollar after successful Spanish and Italian bond auctions, reflecting positive investor sentiment. Read more on U.S, equity markets.
European Central Bank President Mario Draghi’s comment that the bloc’s debt markets seem to have stabilized also helped sentiment, strategists said. Read more on ECB meeting.
Several mining and metals shares climbed in Asia after a softer dollar pushed commodity prices higher on Thursday.
Shares of Pacific Metals Co. /zigman2/quotes/203626509/delayed PFMTF 0.00% /zigman2/quotes/209253802/delayed JP:5541 +0.91% jumped 4.5% in Tokyo, Rio Tinto Ltd. /zigman2/quotes/200083756/delayed AU:RIO +1.70% /zigman2/quotes/202627887/composite RIO +1.39% added 0.7% in Sydney and Korea Zinc Co. climbed 3.6% in Seoul. In Hong Kong, Aluminum Corp. of China Ltd. /zigman2/quotes/208051344/composite ACH +2.90% /zigman2/quotes/202960704/delayed HK:2600 +1.23% added 2.2% and Maanshan Iron & Steel Co. /zigman2/quotes/205365330/delayed HK:323 -1.95% /zigman2/quotes/202183707/delayed MAANF 0.00% gained 3.5%.
Shares of Inpex Corp. /zigman2/quotes/206689846/delayed JP:1605 +3.01% /zigman2/quotes/207958170/delayed IPXHY +1.18% climbed 1.2% after the Japanese energy producers and French partner Total SA /zigman2/quotes/206172043/delayed FR:FP -0.43% /zigman2/quotes/201824152/composite TOT +1.32% gave the go-ahead to a massive $34 billion Ichthys natural gas-export project in Australia. See report on Inpex-Total approval of Ichthys.
Many of the region’s exporters also climbed, with those in Japan rising as the euro climbed above the 98-yen level. Honda Motor Co. /zigman2/quotes/200490352/delayed JP:7267 -0.10% /zigman2/quotes/207173990/composite HMC +1.19% rose 3.4% and Sharp Corp. /zigman2/quotes/203224600/delayed JP:6753 +0.48% /zigman2/quotes/207472799/delayed SHCAF +2.67% closed 2% higher.
Mainland Chinese stocks fell sharply after data showed the country’s foreign-exchange reserves fell by $20.6 billion in the fourth quarter to $3.18 trillion amid a shrinking trade surplus and worries about foreign exchange outflows.
“Analysts will jump to conclude that there must be big capital flight in the fourth quarter,” Bank of America Merrill Lynch analyst Ting Lu said in a note following the data release, adding that such a direct interpretation might “overstate the size of capital flight.” Read more on China's reserves.
Shares of Anhui Conch Cement Co. /zigman2/quotes/204422624/delayed CN:600585 +2.27% dropped 4.6%, electrical appliances distributor Qingdao Haier Co. /zigman2/quotes/200743595/delayed CN:600690 -1.00% fell 4.3% and SAIC Motor Co. /zigman2/quotes/201442870/delayed CN:600104 -0.31% declined 3.9%.
Some analysts remained optimistic that Beijing will relax its monetary policy stance to support economic growth.
“Markets still have the expectation that the [Chinese] central bank will still lower the reserve requirement ratio either before or after the Lunar New Year,” said KGI’s Kwong, referring to Chinese holiday which begins this year on Jan. 23.
In Hong Kong, footwear retailer Belle International Holdings Ltd. /zigman2/quotes/200535012/delayed BELLF +35.06% plunged 6.9% on disappointment over its fourth-quarter same-store sales growth.