Asian Markets Look to Central Banks

     Asian stocks rose Tuesday on speculation central banks in Europe and the U.S. will do more to boost their ailing economies. 

     Hopes that policy makers will take action came after a report overnight showed the U.S. manufacturing sector had contracted, the first time since July 2009. Investors are also looking ahead to the European Central Bank rate decision on Thursday, as well as employment data coming out of the U.S. later this week.

     "The buying conviction may be limited before the forthcoming employment data and the outcome of the ECB meeting, as investors are willing to take cues for a further easing possibility from these indicators," said Fumiyuki Nakanishi, head of investment and research at SMBC Friend Securities.

     Australian shares were little changed ahead of a central bank meeting outcome, with widespread expectations interest rates would be left unchanged at 3.5%. The S&P ASX 200 was flat.

     Japan's Nikkei Average was 0.5% higher on a strong performance by banks and trading companies. South Korea's Kospi gained 0.8%, helped by a rebound in Samsung Electronics, which gained 0.5% after losing 2.3% on Monday. Singapore's Straits Times Index gained 0.2%.

     In China, the Hang Seng Index was up 1.1% after closing on Monday for a public holiday, while the China Shanghai Composite edged 0.1% lower. 

     The euro stabilized at $1.2582 early on Tuesday, after dropping 0.7% overnight—a fall brought about as the optimism created by last week's European summit started to fade. The dollar weakened against the yen overnight by 0.4% to 79.51, though it bounced back a little on Tuesday to 79.62.

     Investors in Hong Kong, coming back from a long weekend, were digesting economic data from both China and Macau.

     Chinese property developers—one of the best performing sectors in Hong Kong this year—continued to rise, after news that house prices rebounded month-on-month in June for the first time in nine months. China Resources Land climbed 2.7% and Shimao Property Holdings was 3% higher.

     There are fears however, that a recovery in the housing market could provoke the Chinese government to start tightening policy again. Chinese auto stocks fell after state-run Xinhua news agency reported over the weekend that Guangzhou has imposed restrictions on small- and medium-sized cars to reduce traffic and cut carbon emissions. Guangzhou Automobiledropped 3.9% on the news, and other car companies Geely and Dongfeng Motor Group fell 3.7% and 5.6% respectively, on fears that the scheme could be rolled out to other cities.

     Macau casino operators fell in Hong Kong as the Macau's gambling revenue growth in June came in below expectations, at 12% year-on-year. Although higher than the 7% increase reported in May, the latest score is a reminder that revenue growth has moderated from the aggressive rate in recent years. Sands China was 2% down and SJM Holdings dropped 0.8%. 

Courtesy : Daniel Inman at daniel.inman@wsj.com