Asia report: Most markets rise as banking optimism returns

Asia-Pacific stock markets largely experienced gains on Tuesday, following a Wall Street rally driven by renewed optimism that the banking liquidity crisis could be contained.

The optimism was spurred by UBS' acquisition of the struggling Credit Suisse, and anticipation of a 25-basis point increase in interest rates by the Federal Open Market Committee.

“Asian equity markets took Wall Street's lead, with most markets printing gains given the retreat in market fears around the banking sector as investors digested Credit Suisse's emergency acquisition by UBS and fresh optimism that FDIC’s deposit insurance amount could be increased,” said Patrick Munnelly, market analyst at TickMill Group.

“The ASX 200 nudged up towards a 1% gain for the session, as the Reserve Bank of Australia’s minutes from its March meeting highlighted that policymakers were reconsidering the case for pausing in April, which would allow time to reassess the outlook for the economy.

“However, the board also noted that further tightening is likely necessary to defeat persistent inflationary pressures.”

Munnelly noted that the Hang Seng and Shanghai Composite were also in the green, recovering as Hong Kong benefitted from strength in consumer stocks, while the mainland was again supported by ongoing liquidity injection provisions from the People’s Bank of China.

“The upside was seen as contained on higher money market rates in China, where the overnight repo rate rose to its highest in more than two years.”

Markets mostly positive following Wall Street rally

Japanese markets were closed due to the Vernal Equinox Day holiday, while markets on the mainland saw gains, with the Shanghai Composite up 0.64% to 3,255.65 and the Shenzhen Component up 1.6% to 11,427.25.

Leading performers in Shanghai included ArcSoft Corporation, up 10.62%, and AECC Aero Science and Technology, which added 10.01%.

Hong Kong's Hang Seng Index increased by 1.36% to 19,258.76, with top gainers including ANTA Sports Products, which rose 9.23%, WuXi Biologics, up 8.86%, and Chow Tai Fook Jewellery Group, which was ahead 6.43%.

South Korea's Kospi grew 0.38% to 2,388.35, as Netmarble Games gained 6.3% and Daewoo Shipbuilding jumped 5.59%.

The S&P/ASX 200 in Australia rose 0.82% to 6,955.40, with New Hope Corporation up 8.57%, and Domino’s Pizza Enterprises - the local master franchise of the global takeaway chain - 5.57% fresher.

New Zealand's S&P/NZX 50 was the regional exception, declining 0.29% to 11,531.30, with the biggest losers in Wellington including Synlait Milk, down 7.01%, and Eroad, which lost 6.25%.

In currency markets, the yen was 0.77% weaker against the dollar to last trade at JPY 132.33, while the Aussie was off 0.61% at AUD 1.4976, and the Kiwi retreated 0.94% on the greenback to change hands at NZD 1.6160.

Oil prices meanwhile increased, with Brent crude futures last up 1.12% on ICE at $74.62 per barrel, and the NYMEX quote for West Texas Intermediate ahead 1.42% at $68.60.

Trade performance in focus in Korea, New Zealand

In economic news, South Korea’s trade ministry reported a significant decline in exports and imports for the first 20 days of March.

Exports plummeted 17.4% year-on-year, totalling $30.9bn, while imports fell 5.7%, coming in at $37.3bn.

It said exports to the US showed a 4.6% increase compared to the same period last year, while exports to China and Vietnam saw the most significant declines, dropping 36.2% and 28.3%, respectively.

Imports from China and Taiwan grew 9.1% and 14.1%, while the most substantial decrease in imports came from Australia, with a 24.7% reduction.

“Dismal global demand is likely to continue to weigh down Korean exports in the second quarter, confirming the Bank of Korea’s worries about the economic outlook for Korea,” said Duncan Wrigley at Pantheon Macroeconomics.

“As a result, the Bank is likely to keep the policy rate on hold in the second quarter, and probably the rest of the year.

“China’s reopening rebound probably will offer only a partial offset, as it is only moderate-paced and being driven by consumer services and infrastructure and manufacturing investment, rather than consumer goods.”

South Korea's producer price index (PPI) in February meanwhile increased 4.8% year-on-year, lower than January's 5.1% growth.

The index stood at 120.42, which was slightly higher than January's print of 120.25.

Finally on data, New Zealand's trade deficit for February slightly narrowed to NZD 714m, compared to the NZD 715m print in the same month last year.

Stats NZ reported that goods exports grew 0.8% year-on-year to NZD 5.2bn, while goods imports increased 0.7% to NZD 5.9bn.

Exports to most of New Zealand's major trading partners rose, except for those to the European Union.

China remained New Zealand's largest export partner, with exports growing 7.1% to NZD 1.5bn.

However, imports from China saw the most significant decline among all of New Zealand's trading partners, tumbling 22% to NZD 1.2bn, although imports from other major trading partners increased.

Reporting by Josh White for Sharecast.com.