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Asian Stocks Mixed After Fed Boost

Asianmarkets 111914 26Feb15

Asian stocks turned in a mixed performance on Thursday, with Chinese shares rallying to a four-week high on stimulus hopes and Japanese shares hitting a fresh 15-year high, while the Australian market drifted lower in response to mixed corporate earnings. The markets in India, Singapore and Taiwan also drifted lower as Federal Reserve Chair Janet Yellen reiterated a cautious stance on interest rates during her second-day Congressional testimony.

Chinese shares soared, led by financials and builders, after the State Council said it will pursue proactive fiscal policies to spur growth and help mitigate the pace of the economic slowdown. Also, there are expectations that the government will announce more easing measures to stimulate the economy at the next meeting of the National People's Congress starting next week. The benchmark Shanghai Composite index climbed 2.15 percent to 3,298.36, its highest level since January 28.

Hong Kong's Hang Seng index rose half a percent to close at 24,902.06, reversing early losses following the strong rally on mainland markets.

Japanese shares closed at a fresh near 15-year high after news that Japan's public servant pension fund will raise its target allocation for domestic stocks. The benchmark Nikkei average jumped 200 points or 1.08 percent to finish at 18,785.79, its highest level since April 2000, while the broader Topix index advanced 0.93 percent to close at its highest level since December 2007.

Among the top gainers, J Front Retailing, Daiwa Securities, Yahoo Japan and Kawasaki Kisen Kaisha rallied 3-5 percent. TDK Corp. gained 2.1 percent on a Nikkei report that it will build large factories in Japan for the first time in eight years. Oil explorer Inpex Corp climbed 3.3 percent and Japan Petroleum Exploration added 2.8 percent after oil prices rebounded strongly Wednesday amid a mixed U.S. oil inventories report.

Mizuho Financial Group rose 0.6 percent on a Nikkei report that it is in advanced talks with the Royal Bank of Scotland to buy its U.S. loan assets for several billion dollars. Rival Mitsubishi UFJ Financial soared 3.2 percent and Sumitomo Mitsui Financial advanced 1.9 percent.

On the economic front, Bank of Japan board member Ishida said today that monetary policy should not be adjusted just to meet the inflation target and that economic stability should be the main aim. Speaking about the central bank's aggressive asset purchase policy, Ishida said that the bank will have to take its foot off the accelerator if inflation picks up.

Australian shares retreated from a seven-year high even as weak data fueled expectations that the Reserve Bank of Australia could cut cash rate again at its next week's monetary policy meeting. The benchmark S&P/ASX 200 dropped 0.61 percent to close at 5,908.5.

The big four banks fell about half a percent each. Bauxite miner Alumina dropped 1.1 percent after it reported an annual net loss in 2014, hurt by restructuring charges. Fortescue Metals Group ended virtually unchanged, while BHP Billiton and Rio Tinto rose about 0.2 percent each.

In the oil space, Santos rose 0.8 percent, but Woodside Petroleum edged down marginally and Oil Search slipped 0.2 percent. Crude oil futures reclaimed the $50 level on Wednesday in the wake of reassuring comments from Saudi Arabia's oil minister that oil demand is growing and markets are calm.

Ramsay Health Care rallied 3.6 percent. The private hospital operator lifted its full-year profit target after increasing its interim profit by more than a fifth. Qantas Airways gained 1.4 percent. The airline returned to profitability with a better than expected A$206m after tax interim profit, aided by its massive transformation program and lower fuel costs.

Shares of surfwear company Billabong International tumbled 3.9 percent despite the company returning to profit for the first time in three years in its fiscal first half.

The Australian dollar dropped by almost half a cent as weak capex data fueled speculation of a March rate cut. Australian Bureau of Statistics figures showed that overall private capital expenditure in Australia fell by 2.2 percent in the fourth quarter, worse than the market forecast for a 1.6 percent decline.

Seoul shares extended gains for a seventh day, with sentiment underpinned by rising oil prices, easing concerns over Greece and hints that the U.S. Federal Reserve would not rush into raising interest rates. The benchmark Kospi average rose 0.13 percent to close 1,993.08, a fresh five-month high, led by shipbuilding and chemical stocks.

In economic news, South Korea's total household credit grew at the fastest pace on record during the three-month period to December due to the reduction in interest rates and eased lending rules, central bank data showed.

New Zealand shares hit another record closing high for a second straight day. The benchmark NZX-50 index rose 0.33 percent to 5,861.68, with Xero shares climbing 8.7 percent to its highest level since August, extending Wednesday's 26 percent rally, after the cloud-based accounting software provider said it has raised $147.2 million from two U.S. investors.

Among other prominent gainers, the a2 Milk Company soared 3.6 percent, Spark New Zealand advanced 1.9 percent and Air New Zealand added 1.5 percent.

In economic releases, New Zealand's trade balance unexpectedly turned to a NZ$56 million surplus in January, as the effect of plunging oil prices outpaced a decline in exports led by dairy products, Statistics New Zealand said. That topped expectations for a deficit of NZ$158 million.

Elsewhere, India's Sensex was moving down 0.6 percent ahead of the expiry of February series derivative contracts. Singapore's Straits Times index was down half a percent and the Taiwan Weighted average shed 0.8 percent, while Indonesia's Jakarta Composite index was up 0.2 percent and Malaysia's KLSE Composite index was gaining 0.3 percent.

Taiwan's jobless rate fell to a seasonally adjusted 3.78 percent in January from 3.82 in December, official figures showed. Economists had forecast the jobless rate to edge down to 3.8 percent.

On Wall Street, stocks ended narrowly mixed overnight as investors weighed mixed corporate earnings and Fed Chair Janet Yellen's comments during her second-day Congressional testimony. On the economic front, sales of new U.S. homes fell slightly in January but the overall pace remained near a six-year high, a report showed.

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Major central banks, led by the U.S. Fed, dominated the economics scene this week with some delivering histroic shifts. In the U.S., the Fed was in focus as Chair Jerome Powell announced the latest policy decision and forward guidance. In Asia, all eyes were on the Bank of Japan as markets waited to see if the central bank would exit its ultra loose monetary policy. Find out how the Swiss central bank gave a surprise in Europe and learn what is the path ahead for U.K. interest rates.

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