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GLOBAL MARKETS-Shares powered by Intel, yen out of juice

Published 07/15/2009, 02:36 AM
INTC
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* Asian shares firm for second day on upbeat Intel outlook

* Yen slips as commodity-related currencies gain ground

* Bonds steadier, JGBs aided as BOJ extends credit support

By Wayne Cole

SYDNEY, July 15 (Reuters) - Asian share markets gained for a second session on Wednesday as blockbuster results from tech bellweather Intel Corp seemed to augur well for the U.S. earnings season and for consumer demand globally. European bourses were set to follow with Euro Stoxx futures up 1.3 percent in early trade.

Intel shares were indicated up over 7 percent in after-hours trade, helping lift Nasdaq futures 1.7 percent and S&P 500 futures 0.9 percent.

The news stimulated appetite for risk, including leveraged trades in commodity-linked currencies like the Canadian and Australian dollars, while dimming the attraction of lower yielding safe havens like the yen.

Base metals prices also gained, while crude oil futures jumped above $60 dollar a barrel on stronger equity markets and data showing U.S. oil stockpiles fell last week.

Japan's Nikkei only eked out a 0.1 percent gain, but shares elsewhere across the region rose 2 percent

South Korea's Kospi stood out with a 2.6 percent increase, helped by gains of 5 percent for chip makers Samsung Electronics and Hynix

Australia's S&P ASX 200 share index chimed in with a 1 percent gain, having risen 3.5 percent on Tuesday in its biggest daily advance so far this year.

The Australian dollar likewise benefited from a return to risk, rising to a one-week high at $0.7955 and leaving behind Monday's $0.7700 low. The yen was the major loser as a safe-haven, with the dollar reaching 93.60 yen from a 91.72 trough early in the week, while the euro firmed to 131.07 yen

Banking major Goldman Sachs got the ball rolling overnight by reporting a 33 percent jump in quarterly earnings thanks to stellar trading profits, though its shares barely budged, having run-up ahead of the results.

Australian investment bank Macquarie benefited by association, with its shares up almost 3 percent on the day, though financials elsewhere in the region were mixed.

But it was Intel's results after the bell that really got investors excited as the chip maker's earnings of 18 cents a share far surpassed forecasts of 8 cents. Its outlook also blew past forecasts, potentially signaling stronger consumer demand for personal computers.

Investors and policymakers have been anxiously looking for signs of a pick up in U.S. demand, which is key to a solid global recovery.

ASIAN REBOUND

Intel reported especially strong demand in Asia, bolstering hopes the region would recover even as most Western economies struggled.

Upbeat economic figures from Singapore and Australia had drawn attention on Tuesday, while a business survey from Canada also showed a marked improvement

Retail sales figures from the United States were less encouraging, showing a 0.2 percent drop in June once volatile autos and higher petrol prices were stripped out, indicating consumers were still wary of stepping up spending.

Yet many analysts are sounding more optimistic on the global outlook thanks chiefly to growth in the developing world.

"We are revising growth forecasts up virtually across the globe," wrote Michael Hartnett, Merrill Lynch's chief global equity strategist, in a note to clients.

The U.S. investment bank now sees world growth of 3.7 percent in 2010, with emerging markets up 5.5 percent and the developed world growing 2.2 percent.

"The global recovery is likely to be slow and require sustained policy help," said Hartnett. "But an inflection point in the global economy should encourage investors to rebalance their portfolios to reduce cash, and look for opportunities to increase equity exposure."

The improved mood curbed demand for safe-haven sovereign debt. Yields on U.S. 10-year Treasury notes stood at 3.46 percent, up from a two-month low of 3.26 percent hit Monday.

Japanese government bond futures fared better, helped by a decision by the Bank of Japan to extend its support for corporate finance until December.

Ironically, such support tends to find its way into government debt since banks are so reluctant to lend to customers they end up putting the excess cash into JGBs. (Editing by Kim Coghill)

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