Asian Stocks Gain Steam in Last Hour Trade; Nikkei Clinches Second Closing High

After a session of subdued trading Asian shares ended mostly higher on Thursday, with traders focused on Friday’s U.S. nonfarm payrolls report and the European Central Bank’s policy meeting later Thursday.

News of China’s first-ever bond default and more draining of liquidity from the Chinese central bank weighed on sentiment earlier and kept trade light.

U.S. stocks traded mixed on Wednesday, as investors tracked developments in Ukraine and shrugged off the Federal Reserve’s latest economic report.

The Fed said in its Beige Book report on Wednesday that severe weather across much of the U.S. took a toll on shopping and consumer spending in recent weeks, leading to slower growth and a contraction in some parts of the country.

The blue-chip Dow shed 0.2 percent while the S&P 500 crept down 0.1 percent after rising to hit an intraday record of 1,876.53. The Nasdaq inched up 0.1 percent.

Tokyo rallies 1.6%

Japan’s benchmark Nikkei outperformed regional peers on Thursday, closing at a five-week high of 15,134 for the week on the back of a weakening yen.

The Japanese currency fell 0.3 percent against the U.S. dollar to trade at 102.67 on late Thursday, after Japan revealed a plan to diversify the portfolio of its pension fund to non-bond vehicles, fueling expectations for large-scale stock purchases.

Exporter stocks saw steady gains; Sony piled on 2.4 percent while Toyota Motortraded at a gain of nearly 2 percent all day. Reuters said the car maker may be planning to offer a monthly base pay hike of more than 2,000 yen ($19.37) in this year’s wage negotiations.

Easing a little from a 3 percent gain midday, Fast Retailing eventually finished 1.8 percent higher. The retailer has been in the limelight, on news that it began trading on the Hong Kong Stock Exchange and a possible acquiring of J Crew.

Index heavyweight Softbank advanced nearly 5 percent, on news that its chairman Masayoshi Son, may be planning to talk about a bid for T-Mobile at the Chamber of Commerce in Washington next Tuesday, according to Reuters.

Shanghai gains 0.3%

Mainland shares gained momentum late Thursday to recoup earlier losses. Worries about the Country’s first-ever domestic bond default weighed on the bourse earlier.

Solar equipment producer Chaori Solar said on late Tuesday that it will not be able to meet interest payments on bonds due on Friday.

However, some analysts say the default may be a good thing. “I think it is important if a company cannot survives in its industry with a serious case of over-capacity, that it leads to a default at some point,” says Hans Stoter, Chief Investment Officer at ING Investment Management International, to CNBC’sCash Flow.

“For the first time, we can now witness the resolution of such a default, if it happens tomorrow. I think it is an important experience to go through, for markets to get comfortable and when domestic markets open up to foreign investments, to know what they are getting into, should there be another default in China,” he added.

Further dampening trade was news that the People’s Bank of China will be draining a net 70 billion yuan this week to avoid excess funds in the market.

Gains from property developers capped losses. Vanke rallied 8.3 percent whileChina Merchants Property and Poly Real Estate bolstered over 6 percent.

Coal miners like Yangquan Coal, fell 1.4 percent on fears that the government’s war on pollution may impact businesses. Shandong Gold dropped 1.4 percent amid falling interest in the safe-haven precious metal due to easing tensions in Ukraine.

Sydney flat

Australian shares saw choppy trade near the break-even level, failing to get any boost from strong January trade and retail sales data released earlier in the session.

The benchmark S&P ASX 200 index had risen to a five-and-a-half-year high of 5,446 on Wednesday after fourth-quarter gross domestic product (GDP) beat expectations to grow 0.8 percent on quarter in the last quarter of 2013 and 2.8 percent on-year.

Retail sales beat estimates, rising 1.2 percent on month in January, while Australia’s trade surplus stood at A$1.43 billion, well above expectations of A$270 million surplus in a Reuters poll.

On why Australian shares failed to gain momentum from positive economic data, David Walker, senior equities analyst at StocksInValue told CNBC’s Cash Flow, “The reason why markets is not responding well to good economic data is because it’s fully valued.”

“Currently we are at 5,440, our valuations are 5,175 and 5,550 for the end of the year. So its already trading well on the way to these valuations. Around current levels, unless earnings growth starts to pick up and accelerate, we think its going to struggle along sideways,” he added.

Rio Tinto fell back into negative territory with a 0.4 percent loss, as it announced changes to its board early Thursday.

Other mining stocks also traded in the red for whole of the session; BHP Billitondropped 0.4 percent while Whitehaven Coal shed 0.6 percent.

Seoul adds 0.2%

South Korean shares found strength in the final hour of trading to lift itself into the positive trading zone on Thursday. The benchmark Kospi index was lackluster for most of the session, failing to move ahead on Wednesday’s largest one-day gain in nearly two weeks.

“The local market’s slowing down a bit as focus shifts back to leads from the U.S. and China markets, with Ukraine worries easing,” said IM investment analyst Kang Hyun-gee.

Samsung Electronics fell 0.7 percent. The smartphone maker was in the news for being in talks with carmakers BMW and Volkswagon to supply a smartphone application for cars.

Steelmaker Posco rose 1 percent, lifted by China’s growth targets on Wednesday.

India up 1.1%

India’s benchmark Sensex index rose on Thursday. The country saw street violence eruption after Wednesday’s announcement that April 7 will be the start of parliamentary elections, with voting to be held in nine staggered phases until May 12.

Source: CNBC