Month: January 2015

Will ECB’s bazooka be a game changer for EMs?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The European Central Bank`s (ECB) bold bond-buying scheme is set to provide a temporary boost to Asian equities but is no game changer for the region`s markets, say analysts.

After months of speculation, the ECB on Thursday pledged to buy 60 billion euros (USD 70 billion) worth of private and public bonds each month until September 2016 in a program that could amount to 1.1 trillion euros.

This was more aggressive than the 50 billion euros in monthly asset purchases analysts expected. Investors applauded the move, sending European and US equities higher overnight.

The positive sentiment carried over into the Asian trading session on Wednesday, with South Korea`s KOSPI rising 0.8 percent and Indonesia`s Jakarta Composite up 1 percent. But, analysts expect the lift will be short-lived.

“I doubt the increased liquidity will be driving a lot of fund inflows into Asia [over the medium-term],” Stephen Sheung, head of investment strategy at SHK Private told CNBC.

“A lot of that amount of money will likely be stuck in European banking system rather than flowing out,” he said.

Funds that do flow out are likely to go into the US or US dollar assets instead of Asian stocks, Sheung said, citing deteriorating growth in the region.

“We have growth problems here in Asia, US economic conditions are on a much more stable footing, and there are prospects for further US dollar appreciation,” he said.

Nicholas Ferres, investment director at Eastspring Investments points out that the ECB`s action may have negative implications for European demand for Asian goods, due to the weakening euro. This does not bode well for Asian exporters.

“[On the negative side], the weaker euro reduces the purchasing power of the Europeans and therefore their ability to import from Asia,” Ferres said. The euro sank to a more than 11-year low against the dollar and a three-month low against the yen on Thursday following the ECB`s announcement.

“On the positive side, it will likely improve risk perceptions and risk appetite and that might help cheap cyclical stocks rally,” he said.

More than liquidity finding its way into Asia markets, Sheung says the ECB action is likely to drive Asian intuitional investors and large corporations to make investments in Europe.

“With liquidly abundant and the euro cheaper, it makes investments more attractive,” he said.

“Asian investors won`t necessarily look at equities or debt but more at direct investments in projects or infrastructure. This has been a hot topic for the past two to three quarters.”

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

China factories stall for second straight month

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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China’s manufacturing activity remained in contraction for a second straight month, a private survey showed on Friday, underscoring the sluggish Chinese economy and adding to the case for further monetary policy easing.

The flash HSBC Purchasing Managers’ Index (PMI) came in at 49.8, after registering a 49.6 final reading in December, its first contraction in seven months. The 50-point mark separates growth from contraction.

Chinese markets were little changed following the data. The Shanghai Composite index trimmed gains briefly but has since rebounded back to a 0.6 percent gain, while the Hang Seng index held steady at a 1.4 percent rise. The Australian dollar advanced against the US  dollar to fetch USD 0.8050, but has since backed down to trade at USD 0.8030.

“We’re not out of the woods yet, still continuing to see contraction in China,” said Frederic Neumann, co-head of Asian economics research at HSBC. “It’s not the export sector that is problematic, it is the domestic sector. There are still reports of insufficient credit to small and medium enterprises, which is supposed to help stabilize manufacturing.”

The survey showed final demand for China’s factory goods rose this month, but only modestly as the sub-indices for new orders and new export orders stood close to the 50-point threshold.

Reflecting the tumble in oil prices, which have more than halved in the last six months, a sub-index for input prices sank to 39.9, a level not seen since the global financial crisis.
China’s economy expanded at the slowest pace in 24 years in 2014, data showed this week, with gross domestic product rising 7.4 percent, just shy of the government’s target of “around 7.5 percent.”
A growing number of analysts are penciling further moves by the central bank to support the economy. The People’s Bank of China (PBOC) in November surprised markets with an interest rate cut, its first since 2012.
“Stay tuned for more news from PBOC. We expect two more rate cuts, three more cuts in banks’ reserve requirement ratio and quite substantial easing,” he said.
— Reuters contributed to this report.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Commodity currencies face race to the bottom?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Commodity currencies may face a race to the bottom as the Bank of Canada`s surprise rate cut sent the Canadian dollar to five-year lows and could pressure Australia`s central bank to follow suit.

“The reason [the Bank of Canada] cut rates is largely weaker oil prices. Australia is also a commodity exporter. The market could be excused for anticipating the RBA (Reserve Bank of Australia) would adopt a similar viewpoint,” said Greg Gibbs, senior foreign-exchange strategist at RBS

Read More Oil`s new normal is lower for longer: Goldman

Discussions among market participants of whether successive rounds of central bank easing are making for a “tacit currency war” are increasing, he said.

Race to the bottom

On Wednesday, the Bank of Canada (BOC) cut its benchmark rate to 0.75 percent from 1 percent, its first rate change since late 2010, and cut its inflation and growth forecasts, citing the more than 50 percent decline in oil prices since mid-2014. The Canadian dollar, also known as the loonie, tanked, shedding as much as 4 percent against the dollar compared with Tuesday`s levels. The U.S. dollar was fetching around 1.2354 Canadian dollars in Asian trade Thursday, off Wednesday`s high of 1.2394 Canadian dollars, levels not seen since 2009, during the Global Financial Crisis.

Other central banks have also moved to weaken their currencies, with the Bank of Japan`s quantitative easing partly aiming for a weaker yen and Australia`s central bank trying to talk down its dollar. The European Central Bank`s (ECB) likely move to announce plans Thursday to start buying assets set to further dent the euro, already at its weakest against the U.S. dollar since 2003.

“Every central bank is trying to get rates down to zero, if not lower than zero,” Kumar Palghat, managing director at bond manager Kapstream Capital, told CNBC. “The only question is, you take rates down to zero, you depreciate your currency, you buy as much bonds as you want, if it doesn`t work, then what else are they going to do?”

The resources factor

Energy and commodity exporters have particularly felt the heat.

“Oil extraction now comprises roughly 3 percent of Canadian gross domestic product (GDP) and crude oil about 14 percent of Canadian exports,” Wells Fargo Securities said in a note Wednesday.

Read More Are bond yields flashing a panic signal?

But while it estimated that energy jobs were only around 2 percent of the country`s overall employment, the Canadian stock market and the consumer wealth effect may take a larger hit, it said. Energy makes up just over 20 percent of Canada`s SandP/TSX index , compared with only around 10 percent of the U.S.`s SandP 500 index, Wells Fargo said.

But the BOC may have its eye on a weaker loonie`s ability to support the country`s non-oil exporters, especially with 8 percent of Canada`s exports headed to the U.S., it said.

The RBA may take a similar tack at its meeting next month, analysts say.

“The BOC decision has relevant parallels to Australia – namely, a commodity-centric economy with growth slightly below-trend and an inflation pulse that is providing space for some additional easing,” Daniel Been, senior foreign-exchange strategist at ANZ , said in a note Thursday.

Canada`s dependence on oil exports has parallels with Australia, where iron ore and coal make up around 34 percent of the merchandise exports down under, Been said, noting iron ore prices are down 65 percent from their peak.

He expects the Aussie dollar  which was fetching around $0.8061 in mid-day Asian trade, is seeing its “final days” above $0.80.

More to come?

Even that may not be the end of commodity currencies` leg down; some analysts believe the BOC`s cut may not be a “one-and-done” move.

While the BOC cut its expectations for the country`s economic growth to just 1.5 percent for the first half of 2015, with a pick up to 2.0 percent and 2.5 percent in the third and fourth quarters respectively, this rate cut shows “it doesn`t really have that much faith in its own latest economic projections,” David Madani, Canada economist at Capital Economics, said in a note Wednesday.

“With oil prices  already well below the [BOC`s] US$60 per barrel assumption for this year, an additional reduction to 0.50 percent in either March or April is now a distinct possibility,” Madani said.

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Saudi King Abdullah dies

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Saudi Arabia’s King Abdullah bin Abdulaziz Al Saud has died, state television reported early on Friday, and his brother Salman became king, it said in a statement attributed to Salman.

King Salman, thought to be 79, has called on the family’s Allegiance Council to pay allegiance to Muqrin as his crown prince and heir.

By immediately appointing Muqrin as his heir, Salman has moved to avert widespread speculation about the path of the royal succession in the world’s top oil exporter.

President Barack Obama expressed condolences and saluted the late king’s commitment to close US-Saudi ties.

“As a leader, he was always candid and had the courage of his convictions,” Obama said in a statement. “One of those convictions was his steadfast and passionate belief in the importance of the US-Saudi relationship as a force for stability and security in the Middle East and beyond.”

“The closeness and strength of the partnership between our two countries is part of King Abdullah’s legacy,” the statement added.

The succession to Salman is largely expected to be smooth. The Saudi royal family announced in March that 79-year-old Salman would succeed the king. But analysts say there could be implications for the oil markets.

Crude prices jumped after the news broke. US benchmark WTI crude futures rose more than 2 percent to a high of USD 47.76 a barrel, while Brent crude futures rose as high as USD 49.80 a barrel.

“I think the problem for Saudi Arabia does not come from the domestic scene but instead comes from what’s coming from around the region and of course the price of oil being as low as it is below USD 50 a barrel for them,” said Firas Maksad, founder and managing director of Global Policy Advisors (GPA).

Saudi Arabia led OPEC’s decision to maintain its production levels on November, triggering a further collapse in oil prices. Oil prices have plunged more than 50 percent since mid-2014, with Brent at USD 48.52 a barrel at Thursday’s close, and Nymex crude trading at USD 47.62.

 Weeks ago, when King Abdullah was reported to be seriously ill, Saudi watchers told CNBC that the country’s oil, domestic and geopolitical policies should remain virtually unchanged when Salman takes over.

Salman, who has assumed many state duties while also serving as deputy prime minister and minister of defense, was relatively well-liked by regional neighbors and in Washington, according to Karen Elliott House, author of “On Saudi Arabia: Its People, Past, Religion, Fault Lines—and Future.”

Abdullah, thought to have been born in 1923, had ruled Saudi Arabia as king since 2006, but had run the country as de facto regent for a decade before that after his predecessor, King Fahd, suffered a debilitating stroke.

Abdullah pushed cautious changes in the conservative Islamic kingdom including increased women’s rights and economic deregulation, but made no moves towards democracy.

At stake with the appointment of Salman as king is the future direction of the United States’ most important Arab ally and self-appointed champion of Sunni Islam, which has played a pivotal role in the messy aftermath of the Arab spring.

Abdullah played a guiding role in Saudi Arabia’s support for Egypt’s government after the military intervened in 2012, and drove his country’s support for Syria’s rebellion against President Bashar al-Assad.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Asian shares at new highs on ECB easing; Oil in focus

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Asian equity markets traded higher on the final trading day of the week, tracking a global rally after the European Central Bank (ECB) unleashed a 1 trillion euro (USD 1.11 trillion) stimulus package to resuscitate the deflation-hit euro zone.

Overnight, US stocks extended gains into a fourth session, on the back of the ECB’s larger-than-expected easing measures and upbeat quarterly earnings from companies including Southwest Airlines. Both the Dow Jones Industrial Average and S&P 500 gained 1.5 percent, while the Nasdaq piled on 1.8 percent.

In Europe, the pan-European FTSEurofirst 300 closed 1.6 percent higher – its highest closing level since early 2008 – on Thursday, according to Reuters.

Traders are also digesting news that Saudi Arabia’s King Abdullah has died early Friday, making his brother Salman king, according to state television reports. US crude jumped nearly 2 percent to USD 47.12 a barrel in early Asian trade after the news broke, while Brent gained 1.7 percent to hit USD 49.36 a barrel.

Mainland indices up

China’s benchmark Shanghai Composite index gained 0.5 percent in early trade, lessening gains slightly after HSBC’s January flash reading of China’s purchasing managers’ index (PMI) showed manufacturing activity remaining in contraction. The flash reading came in at 49.8, after registering a 49.6 final reading in December, its first contraction in seven months. The 50-point mark separates growth from contraction.

Meanwhile, Hong Kong’s Hang Seng index held steady at a more than 1 percent rise.

Nikkei rises 0.9 percent

Japan’s benchmark Nikkei 225 held on to a near three-week high early Friday, despite the yen strengthening slightly to touch 118.4.

Exporters stocks pulled back as a result of a stronger currency; Toyota Motor trimmed gains to 1.3 percent, while Nissan and Honda added 0.7 and 1.4 percent each.

Oil-related counters traded mixed despite the rebound in crude oil prices, with JX Holdings rising 0.2 percent but Showa Shell erasing early gains to slip 0.3 percent.

ASX climbs 1.3 percent

Australia’s S&P ASX 200 index rocketed to a more than two-month high in early trade, while the Australian dollar hovered near a multi-year low of USD 0.8015 to the dollar, after briefly rising to hit USD 0.8049 after a better-than-expected preliminary gauge of Chinese manufacturing activities.

The energy sector is in focus on the back of sharp moves in the price of crude oil; Oil Search and Woodside Petroleum shot up nearly 3 percent higher each, while Santos doubled gains to 5.5 percent after it reported a 2 percent rise in fourth quarter revenue.

Miners were also firmer despite overnight weakness in iron ore prices. BHP Billiton and Fortescue Metals surged 1.8 and 2.3 percent each, and Rio Tinto added 0.9 percent.

Kospi up 0.9 percent

South Korean shares rose to a near a four-week high, despite data showing the nation’s economy expanding slightly less than expected in the three months to December. The economy expanded 2.7 percent on year in the fourth quarter, just below expectations for a 2.8 percent increase in a Reuters poll.

Index heavyweights contributed to the key index’s rise; Samsung Electronics, the heaviest weighted stock on the Kospi, charged nearly 1 percent, while Hyundai Motor reversed a negative open to bump up 0.9 percent.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Back to black: India on course for 2015 milestone

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

OPEC Secy General: Oil to remain at low levels for a month

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The secretary general of the Organization of Petroleum Exporting Countries told CNBC on Wednesday that oil prices were likely to remain around their current levels for around a month before rebounding.

Speaking at the World Economic Forum in Davos, Switzerland, Abdullah al-Badri, said it was hard to predict oil price movements given the ongoing fluctuations.

“It will stay for another month at this low price, but I’m sure the price will rebound,” he told CNBC.

Read More: OPEC is broken: Dennis Gartman

Brent crude oil prices have dropped almost 50 percent since last year in the biggest annual fall since 2008, amid weakening demand and a refusal by OPEC to cut production in November.

But al-Badri insisted that the group, which provides about a third of the world’s supply, “knew what it was doing.”

“We know that there is over-supply in the market, that there is a lower demand—and we decided to keep production as it is,” he said.

If OPEC was going to reduce supply, it had to be alongside production cuts by non-OPEC members, such as US shale producers, al-Badri said.

He insisted that the group was not playing a “game of chicken” with its rivals, as some analysts have claimed, over who can absorb the dip in prices and not cut back on production.

Read More: Why the oil slump is not just a blip

“This is a collective decision. It is agreed by all the ministers. … There is a pure economic decision. It is not targeted at anybody. … Whatever you hear is nonsense,” he said. “We are more united than ever. … We are a very strong group.”

Oil prices rallied on Wednesday after both Total and ENI said they were cutting investment, with Brent crude moving above USD 49 a barrel and US crude hitting USD 48.06 per barrel. 

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Mario Draghi may need to get a bigger QE boat

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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If Mario Draghi wants to have a significant market impact after Thursday’s European Central Bank meeting, he better not think small.

The financial world’s collective gaze will be focused on the ECB president after the session, during which policymakers are expected to launch a US-style quantitative easing program aimed at injecting liquidity into the sputtering euro zone economy, and goosing asset prices in the process.

History, at least that generated by the Federal Reserve’s historically ambitious three rounds of QE, would suggest that the initiative would boost stocks, commodities and bond yields and, hopefully, generate some real economic growth.

However, that’s likely dependent upon how aggressive Draghi wants to get with the ECB’s version of QE, and specifically whether it can shock a market that already is well aware of the plan.

“Our view is that the extent to which the ECB will surprise markets depends on size (well above market expectation of 500 billion euros) and the extent to which markets will perceive QE as being open-ended,” Gilles Moec, European economist at Bank of America Merrill Lynch, wrote in a report for clients. “ECB communication will be the key.”

 The latter part of the remark refers to the post-meeting news conference Draghi will hold. Indications from him that the ECB continues to plan a “whatever it takes” approach to easing could spark markets, while anything less would be a disappointment.

Read More: ‘Fading’ Europe faces QE risks: Italian business

Moec figures the program will entail government bond buying of between 500 billion and 700 billion euros (USD 580 billion and USD 810 billion) over the span of 18 months, a close-to-consensus expectation that likely already is priced in.

 When headlines leaked of what the ECB was considering, the euro briefly sold, then rebounded and eventually settled slightly higher against the dollar. The trading action was an indication of “how baked-in expectations are to current market prices,” said Christopher Vecchio, currency analyst at DailyFX.

That’s precisely why Thursday’s announcement could just be the first leg of ECB QE, just as the Fed launched two of its own initiatives before finally settling, in the third round, on simply telling the market the asset purchases were “open-ended” and could continue indefinitely. (As it happened, the Fed ended QE3 in October.)

Citigroup economist Willem Buiter thus expects an opening salvo of 600 billion euros over two years, which likely won’t sate the appetite of investors wanting a full frontal attack on deflation.

Read More: Is Draghi about to massivelymisfire?

“We regard such a program as far from optimal: our preference would be for a bigger program, over a shorter period, with full mutualization of any losses agreed at the outset,” Buiter said in a note. “But a limited program may well be needed to get wide support.”

“Such a program may well achieve the ECB’s balance sheet aims but, even with further euro weakness, we doubt it will be enough to break the economy out of ‘low-flation.’ Hence, ECB QE probably will be scaled up further over time,” he added.

In total, QE in Europe, whatever its size, may get more credit than it deserves for what Bespoke Investment Group projects will be a strong year for euro zone equities.

In fact, Bespoke’s Paul Hickey argued in an analysis that one of the big contrarian plays for the year will be European stocks outperforming their US counterparts. That’s been the trend so far in 2015, and he expects it to continue.

Read More: Here’s how the ECB could deliver a euro shock

“US assets (currency and stocks) are relatively overweighted at present; on the other hand, the EUR is underweighted, suggesting that a reversal of both trades (short Europe, long the US) may be extended and poised to reverse,” Hickey said. “This is by no means a perfect signal, but in our view it supports an against-the-herd trade: buying EUR-denominated assets (currency and stocks) to take advantage of a contrarian view that Europe will outperform, regardless of ECB action.”

But Peter Boockvar, a Fed critic who believes QE has outlived its usefulness, said the ECB move is likely a last-ditch effort for central banks to help a slowing global economy.

“This is the final chapter of the extraordinary central bank largesse thrown upon the world since 2008,” said Boockvar, chief market analyst at The Lindsey Group.

“Stocks and bonds of course have benefited tremendously more but the question is for how much longer now that we are at an important moment in the history of central banking. As QE is just a massive bubble-blowing exercise and is about to see its last hurrah, I expect the ongoing correction occurring in US stocks will continue to roll into more and more as the year progresses.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Asian stocks open higher ahead of ECB meeting

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Asian stock markets started Thursday on a positive note, following an inspiring lead from Wall Street overnight amid bets that the European Central Bank (ECB) will launch an aggressive stimulus package at today’s policy meeting.

“It is clear investors are positioning for some aggressive action by Europe. The headline will be the size of the program on a nominal basis, with broad expectations of a 550 billion euros plan,” Stan Shamu, IG’s market strategist, wrote in a report. “With expectations running high, the risk will be for the ECB to disappoint.”

Overnight, U.S. stocks advanced in a choppy session, as investors digested reports that the ECB’s executive board had proposed monthly bond purchases of roughly 50 billion euros in a quantitative easing program that would last at least a year. The Dow Jones Industrial Average ended up 0.2 percent while the S&P 500 added 0.5 percent. The tech-heavy Nasdaq gained 0.3 percent.

Nikkei gains 0.3 percent

Supported by a slightly weaker yen, Japan’s key Nikkei 225 index edged up in early trade. The local currency traded at 118.07 against the US dollar, compared to Wednesday’s close of 117.93.

Toyota Motor was in focus after forecasting lower vehicle sales for 2015 as demand slumped in Japan, China, Indonesia and other key markets. Shares of the world’s top-selling automaker inched up 0.1 percent at the open, while other carmakers like Nissan and Honda crept up 0.5 and 0.2 percent. Suzuki Motor underperformed with a loss of 1.2 percent.

Sony, which was in focus after reports said its entertainment unit is investigating its India operations for bidding fraud and kickbacks, opened up 1.4 percent.

Sydney up 0.6 percent

Australia’s benchmark S&P ASX 200 index shot up to a one-week high, while the Australian dollar ticked up 0.8 percent to buy $0.8098 to the dollar.

“Big 4” lenders led advances, with Westpac Banking, National Australia Bank and ANZ Banking up nearly 1 percent an hour into trade.

Energy producers also cheered gains in crude oil prices overnight; Oil Search and Woodside Petroleum were nearly 3 percent higher, while Santos scaled up 2.1 percent.

Kospi adds 0.4 percent

South Korean shares were higher early Thursday, with index heavyweights leading the way. Samsung Electronics, the heaviest weighted stock on the Kospi index, opened up 0.1 percent while steelmaker Posco tacked on 2 percent.

Hyundai Motor, which was in the news after its labor union said it will appeal against a recent court ruling unfavorable to the automaker’s employees, advanced 0.6 percent at the open.

Korean Air extended Wednesday’s gains to open up 0.7 percent on news that it plans to sell 44 of its planes by 2017 to improve the carrier’s financial situation.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Asian shares broadly higher on US lead; BOJ in focus

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Asian stocks were broadly higher early Wednesday, as traders looked ahead to the Bank of Japan’s announcement of its monetary decision, after a two-day policy meeting.

“Although we are not expecting anything out of the ordinary today, it will be interesting to see if energy prices are raining on their [BOJ policymakers’] inflation goals, along with the consumption tax introduced in April last year,” Evan Lucas, IG’s market strategist, said. “Further downside in the inflation rate will force the BOJ to rethink its position once again.”

Overnight, US stocks ended higher after wavering between positive and negative territories, as investors tracked the price of oil and fourth-quarter earnings from corporations including Johnson & Johnson. The Dow Jones Industrial Average fell as much as 164 points, and bounced back to close flat. The S&P 500 added 0.2 percent while the tech-heavy Nasdaq settled 0.4 percent higher.

Oil declined about 5 percent on Tuesday after the International Monetary Fund cut its 2015 global economic forecast on lower fuel demand and key producer Iran hinted prices could drop to $25 a barrel without supportive OPEC action. US crude finished 4.7 percent lower at $46.39 a barrel, near its intraday bottom of $46.23. Brent crude dropped 70 cents to $48 a barrel.

Meanwhile, the World Economic Forum in Davos kicks off today with the spotlight firmly on the European Central Bank and the weakness in the euro zone economy. Speaking overnight, former US Treasury Secretary Larry Summers warned that the European economy is on the “brink of deflating” and urgently needs more stimulus, particularly from Germany.

Nikkei drops 0.6 percent

Japan’s benchmark Nikkei 225 index fell early Wednesday, as the yen strengthened 0.3 percent against the US dollar to fetch 118.4. Automaker stocks suffered as a result; Toyota Motor and Nissan fell 1.7 and 0.1 percent, while Suzuki Motor plunged 2.6 percent.

Tokyo-based electrical equipment manufacturing company Fujikura was the top loser with a 3.9 percent slump.

Mainland indices up

China’s benchmark Shanghai Composite index opened up 0.6 percent, as brokerages rebounded after suffering steep losses in the previous sessions due to a crackdown on margin financing. Haitong Securities and Founder Securities gained over 2 percent each, while Citic Securities piled on 0.9 percent in early trade.

Among top gainers, train makers CSR and China CNR scaled up more than 8 percent each on news that the former’s board has approved its merger with CNR through a share swap.

Spring Airlines began its debut in Shanghai on a positive note, with shares of the Chinese budget carrier jumping 44 percent to 26.15 yuan, compared with its issue price of 18.16 yuan.

Meanwhile, Hong Kong’s Hang Seng index opened 0.8 percent higher.

ASX rises 1.3 percent

Australia’s key S&P ASX 200 index jumped to a one-week high in early trade, while the Australian dollar pared losses to buy $0.8171 to the dollar.

Gold producers led gains, with Evolution Mining and Beadell Resources surging 8.4 and 4.2 percent as spot gold rose to a four-and-a-half-month high on Tuesday.

BHP Billiton added nearly 2 percent, after the world’s biggest miner announced that it would cut its shale drilling spending over the next six months as it looks to meet its promise not to cut dividends in the face of a collapse in iron ore, copper and oil prices.

Meanwhile, a survey by the Melbourne Institute and Westpac Bank showed Australia’s consumer sentiment rebounded in January as sharp falls in petrol prices and better news on employment left people more ready to splash out on major items. Retailers were broadly higher on the news; Myer and Harvey Norman escalated 1.4 and 1 percent, respectively, while JB Hi-Fi crept down 0.4 percent.

Kospi loses 0.4 percent

South Korean shares backed down from a one-week high to slip into negative territory, as losses widened in the energy and utility sectors. Korea Gas, Kepco and SK Innovation made losses over 2 percent each.

Korean Air traded 0.6 percent higher percent on news that its affiliate Hanjin Energy has sold all of its stake in South Korean refiner S-Oil to Aramco Overseas Company, a unit of Saudi Arabia’s state oil firm.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow