Asian shares mostly higher on bargain buying

PUBLISHED : Tuesday, 25 June, 2013, 11:00am
UPDATED : Tuesday, 25 June, 2013, 11:01am

Asian markets mostly edged up on Tuesday as bargain hunters moved in following a sell-off over the past week, while ongoing concerns about liquidity in China kept Shanghai in negative territory.

The dollar also resumed its upward momentum against the yen after seeing a pull-back in New York after a US Federal Reserve official indicated the bank would not immediately wind down its stimulus programme.

Tokyo was 0.54 per cent higher, Hong Kong added 0.49 per cent, Sydney was up 0.20 per cent and Seoul was flat while Shanghai slipped 1.07 per cent.

With little news to influence them, dealers took the opportunity to pick up cheap stocks with global markets in turmoil after the Fed suggested last week that it could begin scaling back its bond-buying this year.

Wall Street provided a negative lead, with the three main indices ending well down. The Dow fell 0.94 per cent, the S&P 500 tumbled 1.21 per cent and the Nasdaq shed 1.09 per cent.

The main focus was on Shanghai, which plunged 5.30 per cent Monday on fears over a cash crunch after China’s central bank told lenders to get their houses in order and indicated it would not provide fresh money to financial markets.

Minsheng Securities analyst Zhang Lei said: “We are likely to see (China’s) stock market under more downward pressure if the central bank doesn’t make any policy stance, explicitly or implicitly. Investors are eagerly awaiting signals from the authorities.”

On forex markets the dollar climbed after dipping in New York following comments from Federal Reserve officials that sought to ease concerns over its monetary easing policy.

Narayana Kocherlakota, president of the Federal Reserve Bank of Minneapolis, released a statement and held a conference call with reporters to argue that it would continue the bond-buying until the jobless rate fell further.

And Dallas Federal Reserve chairman Richard Fisher said the central bank was not exiting its stimulus, only scaling it back.

The greenback was at 97.85 yen, against 97.74 yen in New York late Monday. The euro bought US$1.3120 and 128.36 yen against US$1.3124 and 128.28 yen.

Oil prices fell, with New York’s main contract, light sweet crude for delivery in August down 31 cents to US$94.87 a barrel while Brent North Sea crude for August delivery shed 22 cents to US$100.94 in morning trade.

Gold fetched US$1,287.00 per ounce by 0230 GMT, from US$1,283.99 late Monday.