Global Economy is not out of woods
HONG KONG (AFP) - Asian stock markets were higher Wednesday following a rally on Wall Street overnight, with the mood rebounding despite another round of gloomy economic data.
But analysts warned the momentum might not last as fresh numbers pointed to the continuing effects of the global slowdown, which has battered Asia's export-dependent economies.
Japan core fell in January for a fourth straight month, the longest consecutive downturn on record, while China said more than 25 percent year-on-year in February -- a worse-than-expected decline.
"Rallies in equity markets overnight are being extended in Asia and are a valid reason for investor cheer when good news has been hard to come by of late," Societe Generale strategist Patrick Bennett told Dow Jones Newswires.
"(Still), we don't believe the last couple of sessions will have marked a turning point. The global economy is far from out of the woods."
After a tough start to the week that saw new 26-year lows, Japan's Nikkei-225 index bounced back to finish the morning session up 4.0 percent.
Hong Kong opened up 4.4 percent, Sydney was up 2.3 percent, Seoul was 2.8 percent higher, and Shanghai gained 1.1 percent. Other regional markets were also on positive ground.
Shares in banking giant HSBC were sharply up in Hong Kong for a second straight day, clawing back almost all of the losses from a 24 percent drop Monday that is now being probed by the city's securities watchdog.
The gains came after the Dow Jones Industrial Average picked up 5.8 percent overnight, while the Nasdaq gained 7.1 percent.
Analysts said some of the positive sentiment came on news that Citigroup, which has had repeated bailouts from the US government, had been profitable in the first two months of the year.
In London on Tuesday, the FTSE 100 added 4.88 percent, the Paris CAC 40 soared 5.75 percent and the Dax in Frankfurt gained 5.28 percent.
Despite the gains, many analysts said the continuing volatility and the overall negative climate left them wary.
In New Zealand, which was 1.6 percent ahead in intraday trade Wednesday, broker James Lee at First NZ Capital said the market was on edge ahead of a central bank decision Thursday on interest rates.
"The volatility of the market wouldn't give you any confidence that you are going to see a sustained rally," he told Dow Jones Newswires