Tokyo -Asian stocks rose to a three-week high on Wednesday, led by gains in technology issues after Intel's results beat market expectations, while the euro held firm near two-month peaks against a softer US dollar.
Helping drive sentiment was a strong start to the US corporate earnings season this week and easing concerns about the eurozone's sovereign debt and the financial sector.
After the close on Wall Street, Intel Corp, the world's top micro-chip maker, reported second-quarter earnings that blew past analysts' expectations, allaying fears that companies may be slowing down their spending on technology.
Intel's upbeat view boosted shares of Asian chip-related shares such as Samsung Electronics, the world's top maker of DRAM memory chips, and leading contract chipmaker TSMC, which rose 3.5% and 1.3%, respectively.
Investors also brushed aside a Moody's downgrade of Portugal's sovereign credit rating by two notches, and chose to focus on the strong response to a treasury bill tender by Greece.
The debt-laden country sold
€1.625bn of T-bills at a better rate than it pays to borrow under a European Union/International Monetary rescue fund.
"There's been growing doubts about the health of the US economy, but these better-than-expected Intel results have really changed sentiment in the market," said Toshiyuki Kanayama, a market analyst at Monex in Japan.
The MSCI ex-Japan share index was up 1.4% by midday, having earlier risen as much as 1.7% to its highest since late June, after US stocks rallied for a sixth straight day on Tuesday.
Optimism about this season's earnings rose after Alcoa, the first Dow component to report, posted second-quarter results late on Monday that beat expectations. Rail company CSX also posted a higher-than-expected profit and said it would be hiring more workers in the next year.
Adding to the upbeat note, Intel executives said there are clear signs of renewed spending by corporations.
"Now that corporations have some breathing room in the economy and their budgets, you're starting to see those machines that were four- or five-years-old get refreshed," Intel CEO Paul Otellini said in a conference call with analysts.
Japan's Nikkei average surged as much as 2.8% to shoot above a key resistance level, with chip gear manufacturer Tokyo Electron and other chip-related shares powering higher. Tokyo Electron rose nearly 4%.
Japanese stocks outperformed other regional markets, further helped by a climb in shares of Mizuho Financial Group after the banking group set the price of its new shares for public offering on Tuesday.
Shares of Komatsu, the world's No.2 construction machinery maker, jumped more than 5% after it sharply raised its full-year profit forecast, citing better-than-expected first-half sales in Asia and Latin America, as well as a pick up in demand in Japan and the United States.
Buoyed by gains in tech stocks, South Korea's benchmark share index hit its highest intraday levels in more than two years, and Taiwan stocks rose to a two-month high. Both were up more than 1%.
The focus is now on quarterly reports from JPMorgan on Thursday and General Electric on Friday.
Still, some market watchers remained wary, noting that further gains may be hard to achieve in the short term.
An accumulation of long positions in the market, especially in blue-chip exporters, could slow upward momentum, one analyst said. Many investors remain cautious about deploying fresh money after a recent string of weak readings on the US economy suggested that its recovery may be slowing.
Euro steady
In currency markets, the euro held steady at $1.2720 on the trading platform EBS, having jumped nearly 1% in the previous session. It hit a two-month peak of $1.2739 on Tuesday.
Investors were also seen adding to long positions in high-yielding currencies amid a seemingly significant improvement in appetite for riskier assets.
"What we are seeing is that cash is being put back to work with all the negative news surrounding the eurozone receding," said Greg Gibbs, currency strategist at RBS, Sydney.
"Some of the risk premium that was being attached to the eurozone is being taken off. The downgrade of Portugal was very much expected and we could see the euro rise a bit more from here."
The Aussie and New Zealand dollars held near two-month highs. The Aussie climbed to $0.8851 with resistance at the June high of $0.8860, and at $0.8885, the 100-day moving average and 61.8% retracement of April 12 to May 25 slide.
The New Zealand dollar pared some of its gains to trade at $0.7173 after retails sales in May rose less than expected. Still, it did little to alter expectations of more interest rate rises.
Japanese government bonds fell as a surge by Tokyo stocks curbed appetite for safe haven debt.
The fall in JGBs was limited by bargain hunting from a variety of investors. September 10-year JGB futures fell 0.18 point to 141.22 after hitting 141.12, a two-week low. The benchmark 10-year yield rose 1.5 basis points to 1.140%.
Crude oil futures dipped below $77 a barrel after jumping nearly 3% overnight as better-than-expected corporate earnings boosted confidence about the economy.
- Reuters