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Dec 28, 2016

Asian Markets at Close Report on December 28, 2016: Commodities Fuel Australia Stock Rally; Nikkei Flat After Weak Data

marketwatch.com

Kenan Machado


Asian shares closed broadly higher Wednesday, with strength on Wall Street driving up Australian stocks, while equity markets in Southeast Asia were boosted by the return of some foreign funds.

Australia’s S&P/ASX 200 XJO, +1.01%  ended up 1% after a four-day weekend, led by a rally among commodities stocks. Among those, BHP Billiton BHP, +0.65% BLT, +4.25% BHP, +3.29%  closed up 3.3%, Rio Tinto RIO, +3.35% RIO, +0.60% RIO, +2.38%  added 2.4% and Fortescue Metals FMG, +3.47%  surged 3.5%.
“The further improvement in U.S. economic conditions fed buying in copper and iron ore, as well as oil prices,” said Michael McCarthy, chief market strategist at broker CMC Markets.
Overnight, the Nasdaq Composite COMP, +0.45%  rose 0.5% to a fresh record high, while the Dow Jones Industrial Average DJIA, +0.06%  closed in on the key 20,000-point mark on robust data and hopes that President-elect Donald Trump’s corporate tax cuts and economic stimulus will boost the world’s biggest economy.
Consumer confidence in the U.S. rose to 113.7 in December, its highest reading since August 2001, according to data released Tuesday, up from a revised 109.4 in November.
On Wednesday, stock markets in Southeast Asia were among the day’s biggest gainers, with the JSX index JAKIDX, +1.50%  in Indonesia rising 2.1%, adding to Tuesday’s 1.5% rise, as investors piled back in following last week’s correction.
Analysts say they see some foreign funds returning to emerging economies, pushing up stock markets in the region. In the Philippines, the PSEi Index PSEI, +2.83%  was up 2.8%, while the FTSE Straits Times Index STI, +0.43%  in Singapore gained 0.4%.
Hong Kong’s Hang Seng Index HSI, +0.83%  posted a sharp rebound in late trade on Wednesday to end up 0.8%, helped by a surge in China-related shares. China Construction 0939, +4.80%  ained 4.8%, while tech giant Tencent 0700, +2.17%  closed up 2.2%.
However, weak macroeconomic data in Japan weighed on stocks there on Wednesday. The Nikkei Stock Average NIK, -0.01%  lost 1.34 points, or 0.01%, to end at 19,401.72. The market suffered from the lingering effects of Tuesday’s data that showed consumer prices falling for a ninth consecutive month in November, undermining the government’s efforts to spur inflation.
This overshadowed fresh data Wednesday that showed industrial production rose 1.5% on month in November on a seasonally-adjusted basis, but slightly below the 1.7% increase expected by economists.
Shares in Toshiba Corp. 6502, -20.43%  tumbled 20% after the company disclosed that overrun costs at its U.S. nuclear reactors under construction will likely lead to several billion dollars worth of write downs.
“It’s an unexpected development at a time when concerns [about the company] had been receding,” said Yoshinori Ogawa, a strategist at Okasan Securities. Shares in the company rose 97% in the year prior to Dec. 23, exchange data showed.
Meanwhile, shares of industrial power tool maker Hitachi Koki 6581, +16.20%  surged 16%, following a report by the Nikkei that parent Hitachi 6501, +1.30%  gave U.S. private-equity firm Kohlberg Kravis Roberts preferential negotiating rights to buy its Hitachi Koki unit.
The Tokyo exchange lifted a trading suspension of the shares after Hitachi said that nothing has been decided. Nikkei said the possible deal could exceed Y150 billion ($1.27 billion).
In the energy segment, firmer crude oil prices helped Australia’s Oil Search OSH, +1.44%  and Santos STO, +2.28%  add 1.4% and 2.3% respectively, with Japan Petroleum 1662, +0.99%  gaining 1%.
Crude prices have been on the rise after most members of the Organization of the Petroleum Exporting Countries and other non-cartel producers agreed in November to cut global output by nearly 1.8 million barrels in phases, beginning January. Brent crude, the international oil benchmark, rose 1.7% in U.S. trade though it gave up some gains in Asian trade on profit-taking.
Elsewhere in Asia, the Shanghai Composite Index SHCOMP, -0.40%  closed down 0.4% as tightening liquidity towards the year-end weighed on volumes. 
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