Japan Rallies to Seven-Year High

Ivaylo
15 Feb, 2007
New York City

Asian markets finished higher on Thursday with Japanese shares surging to their highest level in almost seven years on strong economic growth, while HK stocks soared on the comments of U.S. Fed Chairman Ben Bernanke on Wednesday. Retailers led the advance in Japan as the consumer spending of the country was particularly upbeat. In China, institutions bought in large-caps while in Australia strong corporate earnings pushed the market higher.

[R]8:30AM Asian markets rallied on Thursday with Japan at seven-year high.[/R]
Asian markets finished higher on Thursday. Japanese Nikkei Index ended 0.8% higher at 17,897. Retailers led the gainers. Department store Takashimaya jumped 10%, while convenience-store operator Seven & I Holdings gained 4.7%. The Hong Kong Hang Seng Index jumped 1.6% to 20,538. In Hong Kong, large-caps ended higher after comments by U.S. Federal Reserve Chairman Ben Bernanke raised expectations for a U.S. interest-rate reduction later this year, sending the benchmark index higher. Sun Hung Kai Properties advanced 1.8%, Cheung Kong was up 1.2% and Hang Lung Properties closed 2.8% higher.

The Shanghai Composite Index surged 3% to 2,993. Large-capitalized Baoshan Iron & Steel added 3.3%, China Chemical & Petroleum rose 2.9% and Bank of China surged 4%. Australian S&P/ASX 200 advanced 0.5% to close at 5,993. Corporate earnings and strong overseas markets pushed the Australian share market to the 6,000-point level Thursday, hitting its fifth consecutive daily high. Telstra made the biggest contribution to strength in the market, advancing 3.9% after posting a smaller-than-expected fall in its first-half profit. Other markets around the region also rose. South Korean Kospi Index advanced 0.5% to 1,444 and Taipei ended 0.9% higher at 7,809.

[R]6:30AM European markets dipped on Thursday on weakness in the banking stocks.[/R]
European markets were lower on Thursday. . By mid morning, Frankfurt Xetra Dax added 0.1% to 6,964.2, the CAC 40 in Paris fell 0.1% to 5,722.8 and London FTSE 100 shed 0.2% to 6,409.1.

Advancers

DaimlerChrysler, German carmaker, advanced 5.3% after the board of the company on Wednesday proposed a restructuring of the ailing US Chrysler unit. The company also stated that all options were on the table, raising the possibility of a full or partial sale of the division, or a spin off.

Michelin, French tyre maker, added 6% as it targeted between 1.5 billion euros and 1.7 billion euros in cost reductions in the period to 2010 as it struggled with the violent impact of raw materials prices.

Reed Elsevier, Anglo-Dutch publishing group, said it about to sell its underperforming education arm after posting full-year pre-tax profit that missed expectations. The company announced that the sale would result in a more cohesive and predictable business that would generate earnings per share growth of around 10% a year. The shares gained 6%.

Luxury goods group LVMH gained 4.2 % after releasing record full year profits, despite the negative impact of a strong euro, and said it expected further growth in 2007 so long as foreign exchange conditions did not deteriorate. Christian Dior, which owns around 42% of LVMH, also reported strong 2006 results. Its shares gained 4.4%.

Swiss bank Credit Suisse gained 3.6% after posting record Q4 profits that easily topped market forecasts, thanks to a 130 % rise in trading revenues.

Decliners

Banks retreated on concerns over the French retail banking division of BNP Paribas. The bank tooped forecasts with its Q4 net profit, although operating profit was a little weaker than expected due to unforseen costs related to its takeover of Italy’s BNL last year. BNP Paribas fell 3.4%.

Société Générale, which declined in the previous session as similar concerns were raised after it posted full-year results, was down 1.8 %. Credit Agricole shed 2.6%.

Oil and gold

Oil inched above $58 a barrel on Thursday in volatile trade that has trapped prices in a narrow range. U.S. crude for March delivery was 29 cents higher at $58.29 a barrel in early trade in London. Brent crude for April was up 34 cents at $57.77. Gold for immediate delivery was little changed, up 52 cents, or 0.1% at $669.55 an ounce in early trading in London.

Currencies

The euro bought $1.3137 in morning European trading, up slightly from $1.3128 in New York late Wednesday. The British pound rose to $1.9663 from $1.9625. The dollar fell to 120.17 yen from 120.78 yen.

[R]5:00AM Gold and silver advanced Wednesday on weaker dollar.[/R]
April gold advanced $3.50 to end at $672 a troy ounce on the New York Mercantile Exchange while March silver gained 5 cents to finish at $13.965 an ounce. April platinum settled up $11.10 at $1,217.10 an ounce and March palladium added $1.25 to end at $345.85 an ounce. The most-active March copper declined 0.75 cent at $2.5770 per pound after hitting a two-week high.

March crude oil contract lost $1.06 to close at $58 a barrel and March heating oil fell 5.49 cents at $1.6383 a gallon. March gasoline, though, bucked the trend and added 0.71 cent to $1.6162 a gallon. March natural gas shed 12.6 cents to end at $7.241 per million British thermal units.

On the New York Board of Trade, March Arabica coffee futures gained 0.35 cent to close at $1.1405 a pound, with May up 0.10 cent at $1.1670. Futures on raw sugar in foreign ports for March also gained 0.18 cent to finish at 10.56 cents a pound, with May up 0.09 cent at 10.45 cents.