By Michael Kitchen, MarketWatch
LOS ANGELES (MarketWatch) — Asian stocks rose in Monday trading, helped by end-of-the-week gains for U.S. shares and rising hopes for a resolution to the European debt crisis.
Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -1.09% closed with a 2% gain, while Japan’s benchmark Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -0.39% rose 1.5%, and Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -0.33% ended 1.7% higher.
South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -1.49% climbed 1.6%, and the Shanghai Composite /zigman2/quotes/206600939/delayed CN:000001 -0.06% added a more modest 0.4% after spending some of the session in negative territory.
Financial and monetary-policy officials from the Group of 20 major economies met over the weekend in France, saying European leaders would “decisively address the current challenges through a comprehensive plan” at a summit slated for Oct. 23. See WSJ.com report on G-20 meeting and prospects for Europe.
The comments helped sentiment in Asian trading, as did a strong lead from Wall Street, where the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.78% rose 1.5% and the S&P 500 /zigman2/quotes/210599714/realtime SPX -1.05% added 1.7% on Friday, cheered by better-than-expected U.S. retail-sales data. See report on U.S. stock moves Friday.
Louis Capital Markets strategist Mike Hsia said Monday’s Asia gains marked some improvement in Asian investors’ mood.
“The core underlying sentiment of the market is that investors haven’t been positioned for a rally,” Hsia said, and the recent gains have prompted some short-covering and share buying in order to get some exposure to anticipated future gains.
But, he added: “Volumes are not necessarily very high, so conviction is pretty low.”
Following Friday’s stock gains in New York, and with the U.S. dollar remaining solidly above the 77-yen level, Japanese exporters rose broadly.
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Sony Corp. /zigman2/quotes/201361720/delayed JP:6758 -0.57% /zigman2/quotes/208567357/composite SNE -1.20% closed 5% higher, Sharp Corp. /zigman2/quotes/203224600/delayed JP:6753 -0.54% /zigman2/quotes/207472799/delayed SHCAF +3.24% added 2.8%, Advantest Corp. /zigman2/quotes/206869087/delayed JP:6857 -0.89% /zigman2/quotes/202479540/delayed ADTTF -9.55% climbed 2.6%, and Fujitsu Ltd. /zigman2/quotes/208459594/delayed JP:6702 -1.15% /zigman2/quotes/208783738/delayed FJTSY -1.06% rallied 3.7%.
However, Olympus Corp. /zigman2/quotes/200860615/delayed JP:7733 -1.61% /zigman2/quotes/203009041/delayed OCPNF +18.09% tumbled 24% amid several brokerage-rating downgrades after the firm’s former chief executive, who was discharged last week, told The Wall Street Journal he had raised “serious governance concerns” with the company’s chairman. See WSJ.com report on former Olympus CEO’s comments.
The CEO had questioned high fees paid in a series of deals before he joined the Olympus board, and Olympus said Monday that its mergers and acquisitions “all go through appropriate procedures.” See report on Olympus comments.
Over in Hong Kong, major clothing exporter Esprit Holdings Ltd. /zigman2/quotes/205943307/delayed HK:330 -1.41% /zigman2/quotes/209270177/delayed ESHDF -2.78% advanced 7.9%. A Monday report in Germany’s Handelsblatt quoted the company’s chief executive as saying Esprit could close its North American stores within roughly 12-18 months if it is unable to sell them. Read more on Esprit CEO’s reported remarks.
Resource shares were broadly higher across Asia, with Aluminum Corp. of China Ltd., or Chalco /zigman2/quotes/202960704/delayed HK:2600 +0.44% /zigman2/quotes/208051344/composite ACH +1.23% /zigman2/quotes/210453246/delayed CN:601600 0.00% , ahead by 6.7%, Jiangxi Copper Co. /zigman2/quotes/201668148/delayed HK:358 -1.24% /zigman2/quotes/204256025/delayed JIXAY -2.94% /zigman2/quotes/201334192/delayed CN:600362 +0.13% rising 6.2%, and resource-and-property conglomerate Citic Pacific Ltd. /zigman2/quotes/205176597/delayed HK:267 -2.52% /zigman2/quotes/208232395/delayed CTPCF -2.29% improving by 8.2%.
Among Australian miners, Fortescue Metals Group Ltd. /zigman2/quotes/202351558/delayed AU:FMG -1.23% /zigman2/quotes/204116626/delayed FSUMF -0.14% added 4.5%, and Rio Tinto Ltd. /zigman2/quotes/200083756/delayed AU:RIO -0.46% /zigman2/quotes/202627887/composite RIO +0.79% rose 2.4% after saying it is seeking to sell assets to streamline its aluminum division. See report on Rio Tinto’s plans for its aluminum unit.
Rio Tinto rival BHP Billiton Ltd. /zigman2/quotes/201448516/delayed AU:BHP -0.78% /zigman2/quotes/208108397/composite BHP -0.45% rose 2.1%, with reports saying the company is looking at possible acquisitions. One account in The Australian said that BHP could buy U.S. firm Walter Energy Inc. for about $6 billion. See report on possible BHP deal for Walter Energy.
A second report, carried by Britain’s Sunday Times, said BHP could spend $3.1 billion to acquire unlisted Brazilian iron-ore producer Ferrous Resources. See report on possible BHP deal for Ferrous Resources.
A recent rise in crude-oil prices sent many energy firms higher, with Inpex Corp. /zigman2/quotes/206689846/delayed JP:1605 -0.23% /zigman2/quotes/207958170/delayed IPXHY -0.66% up 2.9% and Japan Petroleum Exploration Co. /zigman2/quotes/201212147/delayed JP:1662 -1.14% /zigman2/quotes/202925532/delayed JPTXF -1.12% adding 4.2% in Tokyo, while WorleyParsons Ltd. /zigman2/quotes/210274429/delayed AU:WOR -2.22% /zigman2/quotes/203838000/delayed WYGPF -3.11% gained 1.9% in Sydney, and Cnooc Ltd. /zigman2/quotes/203421416/delayed HK:883 -0.33% /zigman2/quotes/204964401/composite CEO -1.55% improved by 3.3% in Hong Kong.
Looking forward, Louis Capital’s Hsia said the current rally may have legs in the short term, particularly as the market seems to have already priced in a “hard landing” for China, ahead of key economic data — including third-quarter gross domestic product — due Tuesday.
“At the end of the day, valuations in Asia are quite low … so it’s hard to be short equities right now,” Hsia said.