Mixed news is good enough

Asia Pacific markets are mixed in late afternoon trade with Australia bucking the trend. The S&P/ASX200 continues its recovery from the 4650 close just two days ago, adding another 1.4% today. Offshore overnight leads helped but traders are perhaps using the downturn to exploit value opportunities becoming available. The swift rise in commodities overnight is pushing energy and mineral both higher.

The MSCI Asia Pacific Index rose 0.2% to 135.45 as of 12:42 pm in Tokyo. About five stocks increased for each three that declined in the region. Nikkei was last trading flat and Kospi down around 1.5%. Both markets were down early after Japan released GDP declines higher than expectations. The fallout is denting sentiment across the region but the impact is mostly priced in, hence the narrow declines.

Singapore raised its growth forecast for 2011 after the island’s economy expanded the most in Southeast Asia last quarter. Gross domestic product is expected to increase 5% to 7% this year, from an earlier forecast of 4% to 6%.

Moody’s decision to downgrade the big four Australian banks is being shrugged off. The change is based on the funding mix of Australian banks and not necessarily their profitability. In corporate news, Australian listed global logistics group Brambles revised FY11 guidance for NPAT of US$740-80 million, above prior consensus estimates of around US$720 million. The upgrade breaks an otherwise recurring cycle of downgrades over the past few months.

Fed minutes showing tightening ‘not necessarily beginning soon’ saw the US dollar decline against most major crosses. Commodity prices rebounded strongly overnight, particularly copper which is trading well above the important US$4/lb mark. We continue to see energy prices trending lower over the medium term despite last night’s gains, which see brent crude settling above US$112pb.

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