Friday May 16, 05:06 AM
Asian stocks extend gains; Tokyo up on GDP data, BHP rally lifts Sydney market
MANILA (Thomson Financial) - Asian stocks extended their gains on Friday with Tokyo investors cheering stronger-than-expected economic growth and the Sydney market lifted by BHP Billiton (LSE: BLT.L - news) 's record-breaking rally following a report that Chinese interests and a major Australian investment fund were teaming up to buy a 9 percent stake in the world's largest miner.
Other markets in the region including Hong Kong, South Korea and Singapore were also higher following an extended rally on Wall Street and a pullback in oil prices which eased concerns about inflation.
Oil retreated Thursday after soaring close to record highs on concerns about stretched global energy supplies.
New York's main oil futures contract, light sweet crude for June delivery, dipped 10 cents to close at $124.12 dollars a barrel Thursday after spiking to $126.64 dollars, near Tuesday's record $126.98. In morning trade in Asia on Friday, oil went up again 64 cents at $124.76 per barrel.
The Nikkei ended the morning session up 0.2 percent at 14,273.71, off a high of 14,392.53 as profit-taking emerged after the key index surged to a four-month high on better-than-expected GDP data.
The broader Topix index gained 0.7 percent to 1,402.23.
Japan's Cabinet Office said Friday gross domestic product expanded a better-than-expected 0.8 percent in real terms in the first quarter and at an annualized rate of 3.3 percent, also faster than anticipated, on brisk exports to emerging markets like China.
Ten economists polled by Thomson Financial News were looking at 0.4 percent growth for the quarter and an annualized pace of 1.5 percent, on average.
The GDP data showed solid growth in consumption, said Yumi Nishimura, manager for equity marketing at Daiwa Securities SMBC, which should support the equity market 'for a week or two.'
'Strong exports to Europe and Asia, which more than offset falling shipments to the United States, together with relatively solid household spending, contributed to the acceleration in growth,' said Hiroki Owaki, senior economist at the Cabinet Office.
Net exports -- or the difference between exports and imports -- pushed up GDP by 0.5 percentage point, while domestic demand added 0.3 percentage point to overall growth. Consumer spending makes up 55 percent of Japan's GDP.
In Sydney, the S&P/ASX 200 was up 1.3 percent at 5,968.5 while the All Ordinaries index was up 1.2 percent at 6,038.7.
BHP was up 3.2 percent at A$49.51, having reached a record high of A$50. Its takeover target Rio Tinto (Frankfurt: 855018 - news) was up 1.6 percent at A$154.90.
'The market's really being driven by BHP -- it's leading the charge, touching a record A$50,' said Michael Heffernan, a senior analyst at Austock.
'BHP hasn't made any comment but the market is fired up by rumour and speculation.'
Heffernan also said confidence has returned to the market this week, propelling the key indices to the highest levels since January and making a 16.6 percent gain since the market's low point this year of 5,087 points on March 17.
Lag effect of Fed's easing
Hong Kong's Hang Seng (news) advanced 0.7 percent to 25,696.69, tracking overnight gains on Wall Street which was also buoyed by some better-than-expected economic data.
The Dow Jones industrial average rose 0.7 percent to 12,992.66 while other benchmarks including the Nasdaq (NASDAQ: news) gained more than 1 percent.
The Philadelphia Federal Reserve said regional manufacturing activity is contracting in May at a much slower pace than in April, while the Labor Department said the number of laid off-workers applying for jobless benefits rose last week by 6,000 to 371,000 -- near the average analyst forecast.
'We are in a situation here where the U.S. has thrown a lot of bad news on the economy and the credit losses, but the data so far has not shown significant declines,' said Malcolm Wood, Asian Equity strategist at Morgan Stanley (SPU - news) in Hong Kong.
'And over the next few months we have got the tax rebates coming through, which presumably helps hold the consumers together, and we have also got the lag effect of the Fed's very aggressive easing that will be coming through in the year, so I guess the chances of a big decline in the U.S. economy got a lot lower.'
But other data were not encouraging. The Fed said nationwide industrial output sank for the second straight month in April by a greater-than-expected 0.7 percent due to big cutbacks in the automotive and other manufacturing industries.
South Korea's Kospi was slightly higher, up 0.3 percent at 1,891.82.
The Singapore Straits Times gained 0.8 percent to 3,234.35 and the Kuala Lumpur Composite was up 0.5 percent at 1,300.73.
The Philippine Composite was up in early trade but by late morning had reversed course, and was last down 0.1 percent at 2,874.80.
The Taiwanese Taiex climbed 0.7 percent to 9,221.24 and the Shanghai Composite rose 0.6 percent to 3,659.15.
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