Equity markets were bolstered by positive sentiment stemming from US and European markets. Nevertheless, car manufacturers in Japan happily rode Toyota’s coattails, after the second largest Japanese automaker upgraded its fiscal-year earnings. In Australia, BHP surprised the market with a drop in first-half earnings of 5.5%, but the company reported a profit of $9.9 billion which is still a strong performance given the headwinds faced last year in the mining sector.
JPN225 closed approximately 1.10% in the green, slightly higher than the AUS200 which posted gains of around 0.39%. The telecommunications sector led the way in Tokyo, followed by the consumer goods and technology sectors. On the other hand, the oil and gas sector pushed AUS200 higher as rising oil prices helped oil producers.
Reports are surfacing suggesting that the Glencore/Xstrata deal is facing a blocking threat from several large investors. However, Glencore and Xstrata have reportedly played down the revolt.
The Japanese index continues to create new yearly highs, but some technicals are suggesting it is overbought (in-particular it’s hourly RSI), we may therefore see JPN225 retrace during tomorrow’s session.
On the fundamental side, talks in Greece will likely dominate sentiment overnight and we expect to see a flow on effect into Asian equities. Any indication that Greece is not going to be able to meet its debt obligations could tip risk over the precipice. Furthermore, tomorrow’s inflation figures out of China have the ability to dominate sentiment in the second half of tomorrow’s session.