Asia Stocks Higher, Australia Bucks Negative Growth Report

Asian shares were broadly higher Wednesday, catching a lift from gains in the U.S., as a weak Japanese yen helped exporters' stocks on the Nikkei Stock Average.

The Nikkei was recently up 0.4% in morning trade. S&P/ASX 200 was 0.6% higher, even though Australia recorded its first negative quarter of economic growth since 2011. Korea's Kospi added 0.1% and Hong Kong's Hang Seng Index rose 0.5%.

Overnight, the Dow Jones Industrial Average hit another record, ending up 0.2%. The S&P 500 rose 0.3% and the Nasdaq Composite gained 0.2%.

In Asia on Wednesday, the yen was recently down 0.3% against the U.S. dollar, which improves the competitiveness of Japanese exporters. Among individual stocks, Toyota Motor was 1.4% higher and Panasonic rose 1.9%

"It's a combination of follow-on from positive sentiment in the U.S. last night," said Alex Furber, a sales trader at CMC Markets in Singapore. "Also remember, Japan is enjoying a slightly weaker yen…so that helps buoy sentiment."

In Australia, gross domestic product fell 0.5% in the third quarter from the second quarter. Economists surveyed by The Wall Street Journal expected the economy to contract by 0.1%.

Treasurer Scott Morrison said a reluctance among businesses to invest was to blame. He called on lawmakers outside the ruling Liberal-National coalition to act "in the national interest" by supporting budget bills, including tax cuts for small businesses.

"Driving investment is the challenge," said Mr. Morrison, adding that he wants to get "capital out of its cave."

Resilience in Australian stocks Wednesday was attributable to gains by the country's big four banks, which make up about a third of the weighting of the S&P/ASX 200 Index.

Bank stocks across Asia were benefiting from reports that Italy was preparing to take a 2 billion euro ($2.1 billion) controlling stake in Banca Monte dei Paschi di Siena, one of the country's many troubled banks.

The Japanese Topix index that tracks banks was recently up 1.8%, with Sumitomo Mitsui Financial adding 1.4% and Mitsubishi UFJ Financial gaining 1.7%. In Australia, Westpac Banking added 1.3%, while Commonwealth Bank of Australia gained 0.8%.

In China, the Shanghai Composite Index was recently down 0.2%, as investors were concerned about additional scrutiny for insurers that have been aggressive about buying stakes in companies.

On Wednesday, China's insurance regulator said it would send two teams to inspect insurers Foresea Life and Evergrande Life, as the government seeks to "contain possible financial risks brought by massive stake buyouts by heavyweight insurance players," according to the official Xinhua News Agency.

Equity investing by insurers in China has lately lifted the Shanghai market and traders are worried that a crackdown will remove this impetus.

"Now that insurance funds are in the regulatory crosshairs, they will be much less of a driving force in the market," said Xiao Shijun, an analyst at Guodu Securities.

More broadly, Asian markets are turning their attention to the U.S. Federal Reserve meeting next week. According to CME Group's FedWatch tool, the probability of a rise in interest rates remains higher than 90%.

Signaling what comes after a December increase in interest rates could prove thornier, though, due to continued uncertainty about economic policy under a Trump administration and Republican-controlled Congress. President-elect Donald Trump has pledged to cut taxes and boost spending, which could spur growth.

David Winning, Yifan Xie, Harriet Torry and Kenan Machado contributed to this article.

Write to Ese Erheriene at [e-mail]

(END) Dow Jones Newswires

December 06, 2016 23:25 ET (04:25 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.