Asian stocks rally on hint of US rate cut

Asian stocks rallied on Monday, led by Tokyo and Seoul, as expectations for strong local earnings and an early US interest rate cut boosted sentiment.

Tokyo stocks closed at their highest level in more than three weeks, as investors returned to the market following a holiday-shortened week.

Hong Kong’s Hang Seng index hit a record of 21,070.21, before slipping to end at 20,896.64, as property stocks rallied further before a government land auction on Tuesday.

South Korea’s Kospi index closed 1.1 per cent higher, having earlier hit a record at 1,585.7.

In Japan, the Nikkei 225 closed up 1.6 per cent to 17,669.83, its highest level since April 11. The broader Topix index added 1.7 per cent to reach 1,733.03.

Investors took heart from weaker-than-expected US data, which raised the chance of an interest rate cut. This, combined with a mildly weaker yen against the dollar, helped drive up the share prices of exporters. Canon jumped 4.1 per cent to Y7,090. Sony Corp, the consumer electronic and entertainment group, gained 2.3 per cent to Y6,560.

Automakers were broadly higher, although they under-performed the broader index. Toyota Motor, which recently overtook GM as the world’s number one carmaker, rose 0.6 per cent to Y7,270.

Steelmakers were on a roll, building on gains made last week. Nippon Steel, Japan’s biggest steelmaker, leapt 4.9 per cent to Y852 in the session’s most active trading. JFE Holdings was up 4.9 per cent at Y7,240.

Japan Airlines, which was battered last week by advance reports of its profits, rose 2.6 per cent to Y234. Despite now expecting a second consecutive year of red ink, the airline won investors by improving core operating performance.

The best-performer on the first section was Colowide, which operates pubs and restaurants. The company soared 19 per cent to Y613 after it said group operating profit for this fiscal year would likely more than double.

Shares of Yahoo Japan were up 4.8 per cent to Y44,800 on reports that the company was in preliminary merger talks with Microsoft.

Shares of Japanese property companies surged after local media reported that office rents in the Tokyo area had risen for two straight years, underlining strong demand for premium office space. Shares of Mitsui Fudosan jumped 5.7 per cent to Y3,710 and Mitsubishi Estate shares closed up 4 per cent to Y3,900. Shares of Sumitomo Realty & Development were 7 per cent higher at Y4,740.

Elsewhere in Asia, Taiwan’s benchmark Taiex index ended at a six-year high, while Singapore’s Strait Times index hit an all-time record in early trading.

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