Friday May 16, 10:06 AM
Asian stocks turn mixed as Nikkei retreats, BHP lifts Sydney market - UPDATE
MANILA (Thomson Financial) - Asian stocks turned mixed in cautious trade on Friday, with the Nikkei (news) slipping into negative territory after advancing earlier on stronger-than-expected economic growth in Japan, while BHP Billiton (LSE: BLT.L - news) 's record-breaking rally lifted the Sydney market amid speculation about Chinese interests buying into the world's largest miner.
Other markets in the region including Hong Kong, Taiwan and Singapore rose, but were off their highs, while South Korea, Malaysia and the Philippines were little changed. China also reversed gains on concerns about high inflation.
An extended rally on Wall Street and a pullback in oil prices overnight encouraged buying early in the day. 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, after a pullback in oil prices eased concerns about inflation.
But caution ahead of the release next week of U.S. economic data, including the producer prices reading for April and the National Association of Realtors' existing homes data, prompted profit-taking.
'The market is unable to shake off worries about the U.S. economy and the uncertainties in the financial markets. This is the reason resistance is strong around the current level,' said Castor Pang, investment strategist at Sun Hung Kai Financial.
Worries about inflation also persist, with oil trading higher in Asia on Friday on tight global supplies and investors buying into the commodity for better returns.
In early afternoon trade, New York's main oil futures contract, light sweet crude for June delivery, was up 73 cents at $124.85 per barrel. It spiked to $126.64 dollars in New York trading overnight, near Tuesday's record peak of $126.98, before retreating to $124.12 dollars a barrel at the close.
The Nikkei closed Friday's session down 0.2 percent at 14,219.48, after investors locked in profits following the market's strong opening gains and the benchmark index's previous rally to a four-month high.
The broader Topix index gained 0.2 percent to 1,395.87.
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 and solid household spending.
Ten economists polled by Thomson Financial News were expecting 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.'
But some economists said Japan's economy may contract in the April-June quarter, with export growth to Asia and Europe slowing down.
'The January-March GDP turned out to be good, but the April-June outlook does not look favorable,' Shinko Securities market analyst Yutaka Miura said.
Buy-in talk lifts BHP
In Sydney, the S&P/ASX 200 was up 0.7 percent at 5,931.0 while the All Ordinaries index rose 0.7 percent at 6,006.1.
BHP Billiton gained 1.5 percent to A$48.70 after hitting a record $50.00 in the morning session. The rise took the value of the group's 3.4-for-1 offer for the world's third-largest miner, Rio Tinto (Frankfurt: 855018 - news) to A$165.58, putting it ahead of Rio Tinto's share price, which closed up 1.9 percent at A$155.35.
BHP's rally followed a report in national daily The Australian that Chinese interests were teaming up with a major Australian investment fund to buy a 9 percent stake in the miner. The report did not identify sources or the parties involved.
'BHP hasn't made any comment but the market is fired up by rumour and speculation,' said Michael Heffernan, a senior analyst at Austock.
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 touched on March 17.
Hong Kong's Hang Seng (news) advanced 0.4 percent to 25,606.88, as investors picked up large caps like Cheung Kong (Holdings) Ltd (0001.HK - news) . and PetroChina Co Ltd (0857.HK - news) . on hopes of upbeat earnings despite the global economic uncertainty.
Cheung Kong rose 3.4 percent to HK$128.50 after Citigroup (NYSE: C - news) raised its target price and the stock remained on the 'buy' list of several brokers.
Asia's largest oil company PetroChina rose nearly 4 percent to HK$11.56. The official Xinhua news agency quoted PetroChina Chairman Jiang Jiemin as saying that the government plans to raise the threshold for windfall taxes charged on domestic crude production.
South Korea's Kospi was up 0.2 percent at 1,888.88
The Singapore Straits Times gained 0.9 percent to 3,235.80 and the Kuala Lumpur Composite was up 0.5 percent at 1,301.16.
Financial markets in Singapore and Malaysia will be closed on Monday for public holidays.
The Taiwanese Taiex climbed 0.4 percent to 9,197.41 but the Shanghai Composite slipped 0.4 percent to 3,624.23.
The Philippine Composite finished up 0.1 percent at 2,879.95 and the Jakarta Composite rose 0.8 percent to 2,469.78.
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