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BETTER-than-expected US data helped lift Asian stocks yesterday, while currency units strengthened against the greenback.
Early yesterday, some regional stocks hit 11-month highs before profit taking pulled them back.
At the close of the session, the Nikkei 225 gained 22.54 points to read 10,375.01, while the Shanghai Composite went up 8.85 points to 3,471.44.
The Jakarta Composite rose 21.3 points, Malaysia's KL Composite edged up 0.73 per cent, and Australia's market went up 1.08 per cent.
Hong Kong bucked the trend as strong gains in HSBC following its first-half earnings were outweighed by losses in Chinese bank stocks.
Still, the general rally across Asia came as data released on Monday showed that US manufacturing continues to shrink, but at a slower pace than last month, while car sales reached a year-high.
As investors warmed to riskier assets, the Australian and New Zealand dollars hit their highest levels against the greenback in nearly a year, while the Singapore dollar posted gains for the third consecutive day.
The Australian dollar was up slightly by 0.04 per cent to US$0.8397, after quarter-on-quarter growth of its retail sales in second quarter, while housing prices exceeded forecasts.
The Kiwi fell slightly to US$0.666 from US$0.6662 a day earlier, while the Sing dollar went up to $1.4332 per US dollar.
However, the Aussie's gains were trimmed after a statement from the Reserve Bank of Australia (RBA) which had shifted away from its rate cutting bias and expressed more optimism on the economy.
This disappointed investors with bets on the Australian currency, even though the authorities stopped short of indicating a need to eventually raise rates.
Indeed, RBC Capital Markets warned that 'our short term valuation model indicates that unless we see sharp rise in commodity prices and interest rate expectations, Aussie dollar is overvalued at current levels'.
Still, investor sentiments remained optimistic, and news of corporate results have been fuelling the stock rally that may well continue.
UOB Treasury Research believes that 'the Sing dollar might continue to strengthen as funds flow into the domestic stock market afterOCBC set the tone for better than expected results from the local banks'.
Asia's economies, especially China and South Korea, were among the first worldwide to show results of fiscal stimulus packages, and Barclays Wealth expects Asian markets to gain by between 5 and 10 per cent till the end of the year.
It sees the most scope for outperformance in economies such as China, India, Singapore, Hong Kong and Thailand.
Still, Uncle Sam has also displayed growing momentum, emboldening investors to shift more money out of cash and into higher-yielding assets.
US car sales in July were at a high, thanks largely to a government programme that offered handouts to trade in older, less fuel-efficient cars.
Total sales hit a seasonally adjusted annualised rate of 11.24 million vehicles in July - the first time this year that figure has risen above 10 million, according to industry researcher Autodata.
In addition, a US factory output indicator showed much less contraction in the sector than expected in July.
Meanwhile, US Treasuries advanced, with the yield on the 30-year bond falling two basis points to 4.38 per cent. Yield on the 10-year issue stood at 3.6158 per cent.
Gold prices remained unchanged at US$954 per ounce on Tuesday, but oil prices fell below US$71 a barrel as investors took profits after a big rally fuelled by signs of economic recovery in the US.
The benchmark crude for September delivery was down 92 US cents at one point to US$70.66 a barrel in electronic trading on the New York Mercantile Exchange.
Earlier in the session, the contract fell as low as US$70.28, in contrast with the US$2.13 gain on Monday.
In London, Brent prices fell 59 US cents to US$72.96 a barrel on the ICE Futures exchange.
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