HONG KONG (MarketWatch) — Most Asian stocks climbed Tuesday on signs of progress in U.S. budget talks to avert the fiscal cliff, with exporters and financial firms driving Japanese shares to their highest level in more than eight months.
“Investors underweight equities are becoming more anxious about being left behind if there is a reasonable outcome to the U.S. fiscal cliff negotiations,” said Ric Spooner, chief market analyst at CMC Markets.
The Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK +1.06% rose 1% to 9,923.01, a closing level not seen since early April. The advance builds on gains from the previous session, when a landslide election victory for the Liberal Democratic Party (LDP) sparked fresh optimism for the introduction of deflation-fighting policies.
South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 +0.48% and Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -0.03% added 0.5% each, Taiwan’s Taiex rose 0.2% and China’s Shanghai Composite Index /zigman2/quotes/206600939/delayed CN:000001 +0.13% inched up 0.1%.
/zigman2/quotes/210597971/delayed NIK 26,430.80, +276.99, +1.06%
Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -0.13% slipped 0.1%, paring some of this month’s gains.
While overnight gains on Wall Street set the tone for early gains for most regional markets, a further advance for U.S. equity futures and higher commodity prices aided sentiment.
Also supporting stock gains, President Barack Obama reportedly made a new offer late Monday on a deal to avoid the cliff, moving closer to the Republicans’ position. The White House’s latest counterproposal included $1.2 trillion in revenue increases and $1.22 trillion in spending reductions, Reuters reported, citing an unnamed source familiar with the negotiations. Read: Obama reportedly makes new 'fiscal cliff' offer.
Financial firms led the gains in U.S. markets on Monday as fiscal cliff hopes gave investors some confidence about the health of the U.S. economy and optimism on the sector spread to Tokyo on Tuesday.
Nomura Holdings Inc. /zigman2/quotes/206251373/delayed JP:8604 +0.32% /zigman2/quotes/207276383/composite NMR +1.96% climbed 6.4% after a 3.2% rally for its American Depositary Shares overnight, and top Japanese bank Mitsubishi UFJ Financial Group Inc. /zigman2/quotes/207520099/delayed JP:8306 +0.56% rising 3.8%.
In light of current global asset-price reflation and falling volatility, “Japan is our favored contrarian long,” said Merrill Lynch’s global equity strategy team, which recommended buying Japanese banks.
With the dollar trading around ¥84 Tuesday, many blue-chip exporters added to their Monday’s gains. See: Dollar jumps to 19-month high vs. yen.
News of Abe leadership sends yen tumbling
A day after Japan's general election, Shinzo Abe's plan to launch a stimulus to get Japan's economy on track sends the yen lower.
Olympus Corp. /zigman2/quotes/200860615/delayed JP:7733 +1.04% /zigman2/quotes/203009041/delayed OCPNF -2.06% rose 6.2% and industrial major Kawasaki Heavy Industries Ltd. /zigman2/quotes/206655821/delayed JP:7012 +0.51% /zigman2/quotes/202288565/delayed KWHIF -8.68% gained 1.5%.
Tokyo Electric Power Co. /zigman2/quotes/202771076/delayed JP:9501 -1.53% /zigman2/quotes/204529331/delayed TKECF -0.68% zoomed 17.3% higher, also building on strong gains in the previous session, when the stock ended limit-up amid hopes for a more favorable policy towards the sector under the incoming LDP-led government’s regime.
In Hong Kong, insurance major AIA Group Ltd. /zigman2/quotes/201974019/delayed AAIGF +0.51% /zigman2/quotes/203565558/delayed HK:1299 +0.24% lost 3.3% after former parent American Insurance Group Inc. /zigman2/quotes/203700638/composite AIG +1.74% wrapped up its stake sale in AIA. Read: AIG sells AIA shares near top end of range.
Banks also gained broadly, with China Merchants Bank Co. /zigman2/quotes/210188047/delayed CN:600036 -0.80% /zigman2/quotes/208876947/delayed CIHKY -1.63% climbing 1% and China Construction Bank Corp. /zigman2/quotes/208058581/delayed CN:601939 +0.16% /zigman2/quotes/207732534/delayed CICHY +0.22% trading 0.3%.
Elsewhere in the region, Korea Exchange Bank rose 2% in Seoul, National Australia Bank Ltd. /zigman2/quotes/210431826/delayed AU:NAB -0.65% /zigman2/quotes/208329321/delayed NABZY +0.23% added 0.5% in Sydney and Chinatrust Financial Holding Co. advanced 0.6% in Taipei.