Asia stocks gain; Nikkei rallies to 53-month high on BoJ news

Investing.com - Asian stock markets were higher during late Asian trade on Monday, with markets in Japan rallying to the highest level since September 2008 following reports that Tokyo will appoint Asian Development Bank chief Haruhiko Kuroda as the next governor of the Bank of Japan.

Markets also digested data showing manufacturing activity in China expanded at the slowest rate in four months in February, but remained in expansion territory.

During late Asian trade, Hong Kong's Hang Seng Index rose 0.3%, Australia’s ASX/200 Index ended up 0.75%, while Japan’s Nikkei 225 Index rallied 2.4%.

Midway through the session, data showed that China’s HSBC Flash Purchasing Managers Index, the earliest indicator of the country's industrial activity, fell to a four-month low of 50.4 in February from a final reading of 52.3 in January.

The measure however still remains above 50.0, indicating an expansion in manufacturing activity.

In Tokyo, the Nikkei soared to a 53-month high in Tokyo as the yen came under heavy selling pressure on news that Japan’s apparent nominee for central-bank chief favors aggressive monetary easing.

Japanese Prime Minister Abe is expected to make Kuroda’s nomination official by mid-week. The nomination must also be approved by parliament.

The report also said that Kikuo Iwata, who is an advocate of aggressive monetary easing, will be selected as one of two BoJ deputy governors, fuelling speculation the central bank will introduce strong deflation-fighting policy measures.

The yen lost more than 1% against the U.S. dollar to trade at a 33-month high of 94.21. A weaker yen boosts the value of overseas income at Japanese companies when repatriated.

Automakers Mazda and Honda jumped 3.3% and 1.6% respectively, while Sony and Canon tacked on 3.4% and 1.8%.

Japanese megabanks were higher, with stocks of the nation’s largest lender Mitsubishi UFJ Financial Group climbing 2.7%, while Sumitomo Mitsui Financial Group and Mizuho Financial Group rose 1.6% and 2% respectively.

On the downside, Sharp saw shares fall 5.1% after a report said the troubled electronics maker has plans to raise up to JPY200 billion in capital.

Meanwhile, in Hong Kong, the Hang Seng eased up modestly, with shares in the financial sector leading gains.

Index heavyweight HSBC Holdings saw shares rise 1%. Shares of HSBC command a 15% weighting on the Hong Kong benchmark, making it the single largest constituent on the index.

But gains were limited by a downbeat performance by property developers, which came after the territory’s government imposed restrictions on new transactions over the weekend.

Sun Hung Kai Properties lost 2.2%, Henderson Land Development retreated 1%, while Cheung Kong Holdings declined 1.1%.

Elsewhere, in Australia, the benchmark ASX/200 Index inched up to retest last week’s four-and-a-half-year closing high, boosted by strong gains in the country’s banking sector.

The big four banks all rose, with Westpac Banking Group gaining the most, up 1.7%.

Looking ahead, European stock market futures pointed to a steady open, as investors eyed the outcome of a closely contested election in Italy. The results of the election were expected to be known on Tuesday, but exit polls were due to be published on Monday afternoon.

The EURO STOXX 50 futures pointed to a flat open, France’s CAC 40 futures shed 0.1%, London’s FTSE 100 futures dipped 0.15%, while Germany's DAX futures pointed to a drop of 0.1% at the open.