ASIA MARKETS: Australia Shares Rise After Six Days Of Losses As China Fears Subside

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Shares in Australia rose after six straight days of losses, in a broad equities rebound in the region Tuesday, as investors shook off concerns about Chinese growth.

The S&P/ASX 200 rose 1.1% , while Hong Kong’s Hang Seng Index gained 1.4% and South Korea’s Kospi edged 0.5% higher.

The Shanghai Composite Index was roughly flat.

Japan’s market is closed for a holiday.

Earlier Tuesday, Australia’s central bank kept its cash rate target unchanged at a record low of 2.0%, as expected, citing firmer prospects for economic growth.

The Australian dollar dropped immediately after the decision to as low as $0.7144 but later rebounded to trade near the highs of the day.

The currency was last up 0.7% at $0.7196, near strongest in four days, compared with $0.7143 late in Asia Monday.

The rest of the region was mostly higher, recovering from losses after two gauges of Chinese factory activity, released Sunday and Monday, signaled a contraction in October. Investors continue to weigh China’s uncertain prospects for reaching its growth target of about 7% by year-end turning against the likelihood of more stimulus.

The Hang Seng Index led gains, bolstered by consumer-oriented stocks reliant on Chinese demand. Instant-foods maker Tingyi (Cayman Islands) Holding Corp. (0322.HK) was up 2.1% while consumer-products holding company Hengan International Group Co. rose 2.5%.

While Chinese manufacturing data released earlier this week showed activity contracted in October, the readings hinted at improvement. “It’s pointing to some stability in the Chinese economy,” said Angus Nicholson, a market analyst with brokerage IG.

Nicholson added that weak manufacturing data out of the U.S. on Monday supported expectations that the Federal Reserve won’t raise short-term interest rates until next year, a move that threatens to raise borrowing costs for firms around the world and strengthen the U.S. dollar against other currencies.

In the U.S., the Dow Jones Industrial Average pushed into positive territory for the year overnight (http:// www.marketwatch.com/story/wall-street-eyes-a-wary-start-to-november-with-ism-ahead-2015-11-02), driven by health-care and energy stocks. Investors there are looking to a government jobs report due Friday for further clues on when the Fed will act.

Shares in Australia were recovering from their sharpest percentage drop in more than a month on Monday, as investors grew worried over the earnings firepower of the country’s biggest banks.

The S&P ASX 200 lost 1.4% Monday, with Macquarie Group Ltd. (MQG.AU) plunging 4.4% and Westpac Banking Corp. (WBK) falling 2.5%. The selloff came after Australia’s major banks reported record profits for the past financial year, but warned future earnings results might look less rosy because of regulations requiring higher capital levels, increased competition and a rise in bad-debt levels.

A gauge of Australian financial stocks on the S&P/ASX 200 was up 1.3%. Westpac Banking and Macquarie Group were up 2% and 1.5% respectively.

Though Australia’s financial sector has been posting losses for more than a week, Evan Lucas, a market strategist at IG, said that banks in Australia have had a decent reporting season and that Monday’s selloff in financial stocks was overdone.

In Hong Kong, shares of Dongfeng Motor Group Co. (0489.HK) rose 2.2% while Dongfeng Automobile Co. (600006.SH) fell 2% in Shanghai. China’s antigraft regulator said Monday that it is investigating Zhu Fushou, president of the state-run auto maker Dongfeng Motor Corp. for alleged corruption. The firm is China’s second-largest auto maker by sales and has partnerships with several foreign car makers like Japan’s Honda Motor Co. (HMC) and Nissan Motor Co. (NSANY)

Shanghai-listed Deluxe Family Co. (600503.SH) and Daheng New Epoch Technology Inc. (600288.SH) plunged by the maximum daily 10% allowed by regulators for the second straight day. Both stocks were held by Ze Xi Capital, whose chief executive was arrested by authorities for alleged illegal trading, and had risen by the maximum 10% on several trading sessions in the recent past.

Japan Post Holdings Co. will launch its initial public offering on Wednesday, when markets reopen. The deal is the country’s largest privatization in decades, offering investors a chance to buy into a company with more than $2 trillion in assets.

Brent crude oil was flat at $48.77 a barrel in early Asia trade.

Gold prices were down 0.2% at $1,133.90 a troy ounce.

 

 

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