Wall Street surge lifts Asian markets

  • Business
  • Wednesday, 18 Jun 2003


STOCK markets in Asia got a lift yesterday from the strong gains seen overnight on Wall Street after an economic report showed strength was returning to the US economy. 

Tokyo's Nikkei 225 and Hong Kong's Hang Seng Index closed above the 9,000- and 10,000-point levels respectively for the first time since December last year. 

Trading on the KLSE was, in contrast, muted as profit-taking and settlement activity resulted in the Composite Index (CI) rising just 1.79 points to 685.06. 

Stronger manufacturing data from the New York area was sufficient to lift major stock market indices in the United States to their highest levels in about a year after a sell-off last Friday on weaker-than-expected consumer confidence data. 

The New York Federal Reserve index for manufacturing in New York came in at 26.8 for June compared with 10.6 for May, and was three times higher than market expectations. 

The broader S&P 500 closed up 22 points at 1,010 – breaching the 1,000-point level for the first time since June last year – and the Dow Jones Industrial Average surged 201 points to 9,318, its highest since July last year. The tech-heavy Nasdaq closed up 40 points at 1,666. 

The powerful turnaround on Wall Street provided the impetus for the bulls in Asia to resume their buying, with the improved manufacturing data out of New York seen as a hopeful sign of a turnaround in the US economy. 

Such sentiment drove Japanese stocks higher, as investors presumed that a recovery in the United States would improve the financial performance of multinational companies. 

In Hong Kong, the positive sentiment in the United States and hopes of closer economic ties with mainland China triggered a buying spree, sending the Hang Seng to its highest point this year. 

While many Asian stock markets were at multi-month highs, Thai shares climbed to their highest levels in more than three years. Bangkok's SET Index closed up nearly 3% at 442 points as investors snapped up blue-chip counters. 

In Kuala Lumpur, the CI got off to a good start but succumbed later to profit-taking before closing just 0.26% up for the day. 

“The manufacturing data from New York gave investors a bit of hope that the economic recovery in the US will be real,'' said TA Securities head of research C.K. Ngu. ”If other regions come out with positive results, then that could really point to some sort of recovery.” 

Shares in Tenaga Nasional Bhd (TNB), Telekom Malaysia Bhd and Malayan Banking Bhd (Maybank) all closed unchanged: TNB at RM9.10, Telekom at RM7.95 and Maybank at RM8.50. 

“We are in a consolidation phase. The next run could come closer to the end of the month if there is no major disappointing news until then,'' said K&N Kenanga technical analyst Teoh Cheng Guan. 

Even though the CI ended disappointingly compared with the region's performance, with trading volumes tapering off over the past few days, analysts noted that retail interest in equities was still good, with quite a bit of rotation among stocks. 

Shares traded on the Mesdaq market surged in afternoon trade to register impressive one-day percentage gains. 

The Mesdaq rally was led by shares in Symphony House Bhd, which added 13.7% or 13.5 sen to RM1.12. Willowglen MSC Bhd rose 14.29% to 20 sen, PUC Founder (MSC) Bhd was up 11.69% to 43 sen, and Karensoft Technology Bhd jumped 10.71% to 77.5 sen. 

On Tuesday Wall Street surged even further. The report 

NEW YORK (AP) - Wall Street managed slight gains on reports of modest economic improvement Tuesday as investors battled a temptation to cash in profits from Monday's rally. 

Analysts said a report showing a rise in consumer prices worried some investors who were counting on the Federal Reserve to cut interest rates by a half-point.  

But mostly, investors were being cautious after three months of advances. 

"I think the CPI number took some people by surprise; it maybe has the market thinking the Fed might be a little less aggressive at the end of the month,'' said Dennis Ferro, chief investment officer of Evergreen Investments. 

"The market has run a long way and was due for a pause,'' he added. "I think the market is at a point where all the hopes for the second half of the year in economic growth and earnings improvement now need to be validated.'' 

The Dow Jones industrial average closed up 4.06, or 0.04 percent, at 9,323.02, having gained 201 points Monday to its highest level since July 2002. 

The broader market also edged higher. The Nasdaq composite index rose 1.86, or 0.1 percent, to 1,668.44. The Standard & Poor's 500 index inched up 0.92, or 0.1 percent, to 1,011.66. 

The Federal Reserve said production at the nation's factories and utilities edged up by 0.1 percent in May after declining in both March and April. 

It was the first gain in industrial output since February. 

The Commerce Department said housing construction increased by 6.1 percent in May from the previous month to a seasonally adjusted annual rate of 1.73 million new units, indicating continued strength in the housing sector. 

And the Labor Department said its Consumer Price Index, a barometer of inflation, was unchanged in May, an improvement from April's 0.3 percent decline.  

The reading allayed fears of possible deflation, although it stirred concern among those expecting an interest rate cut; economists had predicted the CPI would dip by 0.1 percent. 

"There was no convincing data on the economic side,'' said Chris Wolfe, equity market strategist for J.P. Morgan Private Bank. "Industrial production was trendless versus the previous month.'' 

Wolfe said many investors were holding off on making major stock purchases as the second-quarter earnings season approaches. 

"At the end of the day, it's hard to fathom the trend is anything than a circling pattern around second-quarter earnings,'' he said. 

Ferro agreed. "If we come through the next 3-4 weeks with a reasonable earnings reporting period, that will set the stage for the market to move higher,'' he said. 

Circuit City gained 92 cents, or 13.4 percent, to $7.79 after the electronics retailer posted a quarterly loss that was narrower than expectations. 

Microsoft rose 57 cents to $25.96 after West Virginia settled its antitrust claims against the software company; Lehman Brothers also said the company's stock might be overdue for a rally, citing good valuation. 

Pfizer advanced $1.58 to $36.18 after the drug company issued a full-year outlook that was higher than analysts' estimates. 

Losers included Dow component AT&T, which fell $1.01 to $20.05, after a Merrill Lynch analyst downgraded the telecommunications company's stock to "sell'' from "neutral,'' citing weak business prospects in the coming years. 

Coca-Cola dropped $1 to $47.20 after the soft-drink giant said the Securities and Exchange Commission was investigating an employee's allegations of fraudulent sales claims. 

Declining issues narrowly outnumbered advancers on the New York Stock Exchange. Volume was moderate at 1.46 billion shares, compared with 1.31 billion traded Monday. 

The Russell 2000 index, which tracks smaller company stocks, rose 0.54, or 0.1 percent, to 458.01. - AP 

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