Asian markets gain as world leaders gather

Cautious advance follows volatile Thursday on Wall Street.

malasian markets 224.88 (photo credit: AP)
malasian markets 224.88
(photo credit: AP)
Asian markets gained in the wake of Wall Street's overnight surge as investors nibbled on beaten-down shares and global leaders gathered in Washington to discuss ways to tackle the global financial crisis. Japan's benchmark Nikkei 225 stock average rose 223.75 points, or 2.7 percent, to 8,462.39 and Hong Kong's Hang Seng was up 398.90 points, or 3 percent, to 13,620.25 points. Mainland China's key index was up more than 3 percent, while markets in Australia and Singapore were up just above 1 percent. South Korea's Kospi ended flat after giving up an early rise. The cautious advance in Asia followed a volatile Thursday on Wall Street with an abrupt turnaround muscling the Dow Jones industrial average up more than 550 points, or 6.7 percent, to 8,835.25 after a stream of negative economic and corporate news drove the index to its lows for the year. "Professional investors are taking advantage of dips like we've seen in the past few days as a short-term trading strategy but we are not seeing long-term money coming back into the market," said Mahendran Arjuna, HSBC Private Bank's chief investment strategist for Asia in Singapore. "From a fundamental perspective, markets are at levels we've seen in previous recessions but this is not to do with fundamentals," he said. "It's to do with liquidity and investors have been rushing for the exit, selling shares because they need cash." Some analysts also said investors were positioning themselves ahead of the meeting Friday and Saturday of Group of 20 leaders in Washington. The gathering could bring decisions on mending the troubled global financial system but is unlikely to produce any quick cure for the slowdown gripping major developed economies. The G-20 includes Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, United States and the European Union. The Paris-based Organization for Economic Cooperation and Development said the world's developed countries probably have already entered a recession. Gross domestic product was likely to fall by 0.3 percent in 2009 for its 30 member countries, representing democracies with market economies. It said the US economy would contract by 0.9 percent, Japan by 0.1 percent and the euro area by 0.5 percent. HSBC's Mahendran said it's likely to be many months before some semblance of normality returns to global equity markets. "Investors are waiting for some sign that US house prices have reached a bottom," he said. "Negative equity in the US housing market is continuing to widen and we think it may peak in the second quarter of next year." Bellwether stocks in Japan traded higher. Sony Corp. jumped 3.8 percent and Toyota Motor Corp. rose 2 percent. In currencies, the dollar slipped to 97.08 yen from 97.90 late Thursday in New York. Australian resource stocks rebounded after light, sweet crude for December delivery rose $2.08 to settle at $58.24 a barrel on the New York Mercantile Exchange Thursday. Crude earlier dipped as low as $54.67, a price last seen in January 2007, on reports that the world's biggest economies are in recession and that energy demand has declined to decade-ago levels. In Asian trading Friday, the contract dipped to $57.88 a barrel. Australia's biggest oil and gas producer, Woodside Petroleum, rose 4.3 percent. Mining giants BHP Billiton and Rio Tinto also rallied, with BHP rising 7.4 percent and rival Rio Tinto up 7.7 percent. US stock futures were lower, suggesting Wall Street might retreat Friday. Dow futures were down 80 points, or 0.9 percent, to 8,750.