Asian markets recorded moderate gains following reassuring news that most European banks passed the ‘stress test’, indicating that the European banking system is strong enough to withstand the debt crisis, reports the Associated Press.
Regional exchanges have recovered from last week and instilled optimism among investors, fueled by positive news from the EU. Oil prices held above $79 per barrel, and the euro strengthened against the yen. The Japanese Nikkei index recorded the largest increase – of nearly 1 percent, partly due to reports of an increase in Japanese exports in June, marking growth for the seventh consecutive month. The Nikkei rose by 80.93 points, or 0.9 percent. Mitsubishi UFJ Financial Group Inc., Japan’s largest bank, rose by 0.7 percent, while Sumitomo Mitsui Financial Group increased by 0.4 percent. Other major indices – including Hong Kong’s Hang Seng and South Korea’s Kospi – also rose, although not as significantly as the Nikkei. On Friday, the ‘stress test’ and financial reports lifted the Dow Jones by 102.32 points or 1 percent.
Investor reactions in Asia to the positive results of European banks in the test are indicative of market movements in the EU today, as the ‘stress test’ was conducted after the closure of European exchanges on Friday, so it is still unknown how they will react. Some analysts and U.S. media criticize the European banks’ test as predictable and not strict enough to reflect the true state of the financial sector in the EU. The weak growth in Asian markets does not yet accurately indicate how the banks’ ‘stress test’ will affect investor optimism in the stock market, which we should learn by the closure of European exchanges today. (Z. S.)
