ASIA MARKETS: Asian Stocks Rally, Inspired By U.S. Earnings News, But Australian Stocks Upended Over Political Turmoil

By Lucy Craymer Features Dow Jones Newswires

Australian equities reversed into declines after a court ruling left the country's government without a majority, as stocks there underperformed broad gains elsewhere in the Asia-Pacific region on Friday.

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The nation faces weeks of political turmoil after judges ousted five lawmakers (http://www.marketwatch.com/story/five-australian-lawmakers-including-deputy-prime-minister-ousted-government-loses-majority-2017-10-27)--including the country's deputy leader--because they contravene an obscure constitutional rule barring dual citizenship. The move threatens the conservative government's delicate grip on power given its one-seat majority.

Following news of the ruling, Australia's S&P/ASX 200 fell as much as 0.8% after staying slightly higher for much of the earlier session, and was last down 0.2%. The declines come as local stocks had performed rather strongly this month, and were nearing 2017 highs.

Financial markets "had seen a knee-jerk reaction on the uncertainty that came with the decision," said Paul Dales, Australia and New Zealand chief economist for Capital Economics, though he noted that investors had been aware that such a ruling was a possible.

"This makes it harder for the [Australian government] to pass any measures that it wants," he said.

Australia's late-session declines also weighed on stocks in neighboring New Zealand, with the benchmark NZX-50 reversing gains to end down nearly two points to 8084.99.

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Elsewhere in the region, equities were broadly higher, buoyed by strength in U.S. corporate earnings and the prospect of continuing stimulus in Europe.

Ahead of the start of Asian trading, three of the world's biggest companies -- Google parent Alphabet Inc., Amazon.com Inc. and Microsoft Corp. -- reported booming quarterly growth, sending shares of the three tech giants surging in after-hours trade.

Don't miss:Amazon, Alphabet, Microsoft and Intel unearth billions more in profit (http://www.marketwatch.com/story/amazon-google-microsoft-and-intel-find-billions-more-in-profit-2017-10-26)

U.S. equity futures "are shooting up during Asian trading hours and that is leading a rally in Asian equities," says Margaret Yang, a markets analyst at CMC Markets.

Japanese stocks led the region's strength, helped by a 0.4% decline in the yen against the U.S. dollar when compared with Thursday's Japan closing, as global risk-taking appetite improved. The weaker yen boosted export-related stocks, sending the Nikkei Stock Average up 1.1% to a new 20-year high, and briefly surpassing the key 22,000-point level.

In Hong Kong, the Hang Seng Index was 0.8% at the midday break, after the market's recent underperformance, while Korea's Kospi rose 0.6%, Singapore's Straits Times Index rose 0.5% and Malaysia's benchmark index added 0.6%.

The rally in the three U.S. tech giants lifted technology stocks across the region. Nintendo (7974.TO) shares were up 1.2%, while Samsung Electronics (005930.SE) added 0.8%. Taiwanese chip maker TSMC (2330.TW) rose 1.3%.

The region's gains also come after European Central Bank President Mario Draghi said late Thursday that the bank's bond-buying program could be extended beyond September 2018, even though it would pare back its monthly bond purchases.

Read: Draghi averts 'taper tantrum'--for now--as ECB takes baby step toward end of QE (http://www.marketwatch.com/story/draghi-averts-taper-tantrumfor-nowas-ecb-begins-slow-walk-to-normalization-2017-10-26)

In commodities, iron-ore prices continued to decline, as traders continued to fret about the impact of steel mill closures over the winter months.

ANZ said in a note that these concerns were also weighing on steel futures in China, while sentiment was helped by news that Rio Tinto could potentially increase output at its Australian operations to over 400 million metric tons.

Meanwhile, oil prices were mostly steady after closing at a six-month high overnight in the U.S., boosted by declining stockpiles of fuel and hopes that the global oil cartel will extend a deal to limit global production.

Brent , the global crude benchmark, was last up 3 cents at US$59.3e a barrel, while Nymex crude futures were off 5 cents at US$52.59 a barrel.

(END) Dow Jones Newswires

October 27, 2017 02:10 ET (06:10 GMT)