HONG KONG (MarketWatch) — Major Asian stock benchmarks jumped 2% or more on Thursday to end February on a buoyant note, as eased worries over Italy and the U.S. Federal Reserve’s commitment to monetary stimulus boosted investor sentiment.
Indian shares missed the broad uptrend, reversing course to slide lower after Finance Minister Finance Minister P. Chidambaram proposed higher taxes raised taxes on wealthy individuals in his annual budget.
Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -0.39% soared 2.7%, China’s Shanghai Composite Index /zigman2/quotes/206600939/delayed CN:000001 -0.06% climbed 2.3% and Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -1.09% added 2%.
India’s Sensex /zigman2/quotes/210597966/delayed IN:1 -0.37% fell 0.8% to 18,995.77 in Mumbai afternoon trade, way off the day’s peak at 19,322.28.
The broad regional gains came a day after an Italian debt auction saw a better-than-expected response and Fed Chairman Ben Bernanke’s reaffirmed his commitment to the central bank’s bond-purchase program. Read: U.S. stocks surge in best day since Jan. 2.
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CMC Markets sales trader Miguel Audencial said Bernanke’s statement to Congress provided “a significant boost” to investor confidence.
“Bernanke was able to alleviate some of the concerns of the costs of the Fed’s current quantitative-easing program, indicating that the central bank has the required ammunition to reduce stimulus to avoid a spike in inflation,” he said.
“While confidence is high, there are still risks present,” Audencial said, including negative political news from Italy and the March 1 deadline for the U.S. sequester. Read: The sequester starts Friday. Then what?
The day’s solid performance boosted the Nikkei’s monthly return to 3.8% in February, when the S&P/ASX 200 jumped 4.6% and the Kospi climbed 3.3%. Thursday’s rally also helped pare losses for Chinese equities, with the Hang Seng Index ending the month 3% lower, while the Shanghai Composite fell 0.8%.
India’s Sensex was among the region’s worst performers, with month-to-date losses of 4.6%.
Losses in Mumbai were led by banking, industrial and metals stocks. State Bank of India /zigman2/quotes/206945693/delayed IN:500112 +2.31% shares sank 5.1% and ICICI Bank Ltd. /zigman2/quotes/204318043/delayed IN:532174 +0.35% /zigman2/quotes/208917098/composite IBN -0.73% gave up 3.8%, while Tata Steel Ltd. /zigman2/quotes/208974733/delayed IN:500470 +2.48% skidded 4.7% and Hindalco Industries Ltd. /zigman2/quotes/201182001/delayed IN:500440 +0.93% fell 2.5%.
The drop came even as the finance minister lower the securities transaction tax. Read: India PM flags, deficits as challenges.
Nomura economists called the Indian budget “a missed opportunity,” saying the finance minister’s estimate of a 4.8% fiscal deficit for the year ending March 31, 2014 was higher than the brokerage’s expectation of 4.6%.