Asian Shares Modestly Higher; Australia Jobs Boost Sentiment

SINGAPORE -- Asian stock markets trading modestly higher Thursday on Wall Street's positive lead the prior session. Strong Australian October jobs data provided an early boost to equities as risk-seeking investors took heart.

"Markets are in a sweet spot, with low interest rates and the G-20 vowing to keep stimulus going," said IG Markets institutional dealer Chris Weston in Sydney. "Markets do seem to want to go higher but need that next big catalyst," he said.

Japan's Nikkei 225 was up 0.7%, Australia's S&P/ASX 200 was 0.5% higher, and New Zealand's NZX-50 was up 0.4%. The start of trading in South Korea was delayed by an hour due to school entrance exams. Dow Jones Industrial Average futures were 11 points higher in screen trade.

In Japan, the market was led by automakers and commodity-related stocks.

Toyota Motor rose 3.2%, Honda Motor was up 2.3%, while Mitsui & Co. advanced 2.1%

The market, however, may encounter resistance, said Daiwa Securities SMBC market analyst Yumi Nishimura in Tokyo. "Uncertainties over the Japanese government's economic policies are weighing on market sentiment...if it cuts public works spending, for example, that would be a negative for many industries," she said.

Materials stocks were providing support to Australian shares, with BHP Billiton up 0.4% and Newcrest rising 1.2%. However, financials were mixed, with NAB up 1.0% and Westpac pulling down 0.4%.

Shares in New Zealand were modestly higher, helped by earnings reports. Chips maker Rakon was up 1.7% after reiterating full year operating profit guidance of NZ$4 million to NZ$8 million.

Carpet maker Cavalier advanced 1.7% despite sales falling 30% on the year in the first four months of its fiscal year, as the company said earnings remained ahead of budget.

Australia's October employment data gave a boost to the Australian dollar, and other risky currencies like the euro. The Australian dollar rose over 60 points to a 15-month high of US$0.9351 after the data reinforced the market's view the Reserve Bank of Australia will hike interest rates for the third consecutive time at its Dec. 1 policy meeting.

Australia's unemployment rate rose to a seasonally adjusted 5.8% in October from 5.7% in September, and bang on expectations. The number of employed, however, rose a strong 24,500, topping economists' expectations for a drop of 10,000.

In foreign exchange markets, the euro was at $1.5012 from $1.4976 late in New York Wednesday, and at Y134.87 against the yen from 134.54. The U.S. dollar was little changed against the yen at Y89.89 from Y89.82.

Some traders expect the euro to run into resistance above the $1.5000 handle on caution ahead of eurozone industrial output data for September due later in the global day.

"Many players remain ready to lock in (euro-dollar) gains on rises above 1.5000," said Masanobu Ishikawa, general manager of spot foreign exchange at Tokyo Forex & Ueda Harlow. However, he said that over the longer term, "there likely won't be any changes to the recent rising trend in the euro," as traders expect the European Central Bank to start tightening rates ahead of the Federal Reserve and the Bank Of Japan.

Spot gold hits new record high of $1,120.50 per troy ounce, up $3.70 from the New York close. The yellow metal was led by currency markets, with the U.S. dollar on the back foot after the Australian jobs data.

HSBC analyst James Steel in Sydney said gold will continue to be driven by the U.S. dollar's direction. He said prevailing conditions favored an increase in "risk trade," which generally entails borrowing U.S. dollars to purchase other assets, including hard assets such as gold.

The lead Japanese December bond futures were trading slightly higher after opening down, as investors await the five-year JGB tender results due later in the day. Japan's Ministry of Finance will auction Y2.4 trillion of five-year notes, about Y100 billion more than initially planned. The 10-year cash bond yield was down 0.5 basis point at 1.420%.

December Nymex crude oil futures were last up 19 cents at $79.47 per barrel on Globex, after rising 23 cents Wednesday.