* MSCI Asia ex-Japan adds 0.5 pct, Nikkei ends flat
* Euro hovers below 3-week high vs dollar
* Spain’s Santander reports earnings later in session
* Europe shares likely to open mixed
By Chikako Mogi
TOKYO, April 26 (Reuters) – Asian shares rose on Thursday,
retaining positive momentum as the Federal Reserve reassured
markets it would keep its very accommodative stance to support
growth, while optimism grew over strong quarterly corporate
earnings.
Investor confidence was also boosted by a rally in Apple Inc
shares as it reported quarterly profits nearly doubling
on the back of soaring iPhone sales in China, lifting tech-heavy
Asian markets such as Taiwan and South Korea earlier in the day.
There was scepticism Asian markets would climb as much as
their global counterparts did overnight, however, as concerns
remain over European banks, with Spain’s Santander
reporting its first-quarter results later in the session.
European shares were likely to start mixed, with financial
spreadbetters predicting that major European markets
would open between a 0.1 percent drop and a 0.1
percent gain. U.S. stock futures were steady.
“The main factor currently is the firmness in U.S. markets,
but in the end, it’s Europe and China that hold key to whether
markets can seek more upside,” said Xiao Minjie, chief economist
at FuNNeX Asset Management in Tokyo.
“China is unlikely to take specific monetary and economic
stimulus until the political struggle over its leadership is
cleared, while the euro zone’s debt crisis remains a huge
destabilising factor.”
MSCI’s broadest index of Asia-Pacific shares outside Japan
edged up 0.5 percent.
Hong Kong shares climbed 0.4 percent on strong
quarterly results from China Unicom , the
mainland’s second-largest mobile phone operator, while
Australian stocks added 0.3 percent as signs the Fed was
prepared to offer more stimulus if needed boosted miners and
banks.
Japan’s Nikkei average underperformed, however,
paring all its earlier gains to end flat.
Japanese earnings will likely be patchy, analysts said.
“Winners and losers will be identified by their ability to
beat intensifying global competition,” Xiao said, adding that
the way in which they handled the aftermath of last year’s
earthquake in Japan and the severe floods in Thailand would also
be key.
The recovery in equities helped firm Asian credit markets,
with the spread on the iTraxx Asia ex-Japan investment-grade
index tightening by 2 basis points.
In Japan’s credit default swap market, long- and short-term
dealers played tug-of-war, with buyers seeking protection
recently pushing up spreads on electronic, steel and shipping
names on bad fundamentals. But Japan’s sovereign CDS tightened.
NEUTRAL BERNANKE
The dollar steadied after falling to a three-week low
against a basket of major currencies on Wednesday following the
outcome of the Fed’s meeting, while the euro stood near a
three-week high of $1.3237 touched the day before.
Fed Chairman Ben Bernanke on Wednesday said U.S. monetary
policy was “more or less in the right place” even though the
central bank would not hesitate to launch another round of bond
purchases if the economy were to weaken.
The Fed also adjusted its economic forecasts to acknowledge
an improving labour market and slightly higher inflation over
the next few years, suggesting it has become somewhat less
inclined to take more action to help the economic recovery.
“The totality of all new Fed communications … has
reinforced the idea that the policy bias is currently neutral
and that the outlook remains highly dependent on incoming data,”
Societe Generale wrote in a note.
“There were a few vague and seemingly conflicting signals in
today’s communications, which probably reflect the difficulty in
reconciling the very diverse views within the FOMC,” it said.
With the Fed’s policy decision falling broadly within market
expectations, focus turned to the Bank of Japan’s policy meeting
on Friday, when the Japanese central bank is expected to boost
asset purchases to strengthen an already super-easy policy
stance in a bid to bring Japan out of deflation.
“The probability of the BOJ taking further easing measures
is high and markets have already priced that in,” said Kazuto
Uchida, an executive officer and general manager of the global
markets division at the Bank of Tokyo-Mitsubishi UFJ in Tokyo.
“How currency markets react to the outcome of the BOJ
meeting will determine subsequent moves in equities and bonds,”
he said, adding that anything beyond expected options would
serve as a surprise and generate stronger reactions, starting in
forex.
FRAGILE SPOTS
Fragile global growth kept the outlook mixed for South
Korea, which said on Thursday its growth picked up
quarter-on-quarter in the January-March period, but year-on-year
expansion was the slowest in 2-1/2 years, leaving analysts
wondering if the economy has hit a bottom or not.
Oil futures steadied, with Brent crude holding
near$119 a barrel, as optimism over a recovery in the U.S
economy offset easing concerns of a disruption in Iranian oil
exports and high U.S. crude stocks. U.S. crude steadied
around $104.15 a barrel.
The International Monetary Fund’s stress tests showed most
Spanish banks would be able to handle large economic shocks, but
Spain’s Santander could suffer from provisions against property
loans that went sour when Spain’s property bubble burst.
“Only a surprisingly negative figure will reduce the
market’s optimism caused by the updated Fed outlook. Although
don’t be surprised that concerns over Europe will once again
ruin the party,” said Miguel Audencial, a trader with CMC
Markets in Sydney.
