Asian shares tick, support seen from global monetary stimulus

Reuters: Asian shares edged higher on Thursday, supported by views that the recent run of weak global economic data will encourage major central banks to keep or deepen their monetary stimulus to bolster growth.

Global equities rose on Wednesday on strong corporate earnings and speculation the European Central Bank will cut interest rates next week.

The growing expectations of an ECB rate cut helped offset growth concerns highlighted by US durable goods posting their biggest drop in seven months in March and the ‘Ifo’ survey showing that German business sentiment fell in April, below the most bearish forecasts.

Recent disappointing data in the United States, Europe and China has fuelled bets of a spring global slowdown for a third straight year and forced central banks to take action.

“Despite the weaker data equity markets and risk assets look generally well supported, with Q1 earnings releases and ongoing policy stimulus helping to maintain the positive tone,” strategist at Credit Agricole Mitul Kotecha said in a note.

Most observers have welcomed a 4 April decision by the Bank of Japan to embark on a radical monetary expansion campaign as a fillip to the wider global economy. The BOJ plans to inject about US$ 1.4 trillion into the world’s third-largest economy in less than two years in an effort to end two decades of stagnation.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.1%, with South Korean shares opening 0.1% higher.

“The index is due for a modest rebound given that there is talk of stimulus in Europe and the local GDP figures beat expectations,” an analyst at SK Securities, of Seoul shares Koh Seung-hee said.

Early on Thursday, South Korea said its economy grew a seasonally adjusted 0.9% in the January to March period from the previous quarter, the fastest in two years and far above market expectations.

Japan’s Nikkei stock average also opened up 0.3%, after hitting its highest since June 2008 on Wednesday, as a weakening yen bolstered expectations for improved corporate earnings.

“The weaker Yen is having a positive effect on companies’ earnings, which in turns is lifting stocks,” he said. “For now, we see this trend continuing,” SMBC Nikko Securities assistant general manager Hiroichi Nishi said.

Japan’s capital flows data showed on Thursday that Japanese investors remained net sellers of foreign bonds, in line with comments from big life insurers that they remain cautious about immediately shifting their money out of Japanese Government bonds into foreign bonds.

Japanese investors sold a net 862.6 billion Yen of foreign bonds in the week to 20 April, while foreign investors turned net sellers of Japanese shares.

The Dollar was steady around 99.45 Yen, still within sight of testing the symbolic 100 Yen level which many traders say is just a matter of time.

The Euro remained vulnerable, trading around US$ 1.3013, above Wednesday’s three-week low of US$ 1.2954. The speculation of an ECB rate cut and hopes Italy will break its political deadlock helped support the Euro.

The US Government’s report on gross domestic product due on Friday is expected to show the economy grew at a 3.0% annual rate in the first quarter, rebounding from a 0.4% gain in the final three months of 2012. For the current quarter, economists are looking for expansion of only around 1.5% or so.

On the corporate front, of the 174 companies in the S&P 500 index that already have reported results, 68.4% have exceeded analysts’ expectations, according to Thomson Reuters data through Wednesday morning. US crude was up 0.1% to US$ 91.51, a barrel early on Thursday.