Asian Stocks Rise as Federal Reserve Signals Low Interest Rates

Asian stocks rose, driving the regional benchmark index to the highest in almost two months, after the Federal Reserve renewed its pledge to stimulate U.S. economic growth with low interest rates and as companies from Hyundai Motor Co. (005380) to Advantest Corp. (6857) posted higher earnings.

Honda Motor Co., the Japanese carmaker that gets about 45 percent of sales from North America, gained 2.9 percent in Tokyo. Advantest Corp., the world’s biggest maker of memory-chip testers, increased 5.6 percent. Hyundai Motor, South Korea’s largest automaker, surged to a record. Computershare Ltd. (CPU), the world’s No. 1 share registrar, jumped 7.7 percent in Sydney after agreeing to buy the shareholder services business of Bank of New York Mellon Corp.

The MSCI Asia Pacific Index increased 1.1 percent to 139.32 at 8:34 p.m. in Tokyo, the highest since March 4. About the same number of stocks rose and fell in the gauge. The measure climbed 2.2 percent last week after U.S. companies including Apple Inc. reported increased profits, signaling the global economic recovery is accelerating.

“We have a combination of low interest rates and strong earnings,” said Nader Naeimi, a Sydney-based strategist for AMP Capital, which has almost $100 billion under management. “It’s a pretty good cocktail for a good equity market.”

Nikkei, NZX 50

Japan’s Nikkei 225 (NKY) Stock Average rose 1.6 percent to the highest level since the March 11 earthquake and tsunami. Investors shrugged off a government report today that showed Japan’s industrial production plunged last month after the temblor led to shuttered factories.

New Zealand’s NZX 50 Index rose 0.3 percent after the nation’s central bank kept its benchmark interest rate at a record low as the country recovers from its most devastating earthquake in 80 years. South Korea’s Kospi Index added 0.1 percent. Australia’s S&P/ASX 200 Index was little changed.

China’s Shanghai Composite Index dropped 1.3 percent, erasing earlier gains of as much as 1 percent, on speculation the government will raise interest rates as early as next week to tame inflation. Hong Kong’s Hang Seng Index slipped 0.4 percent, reversing gains of as much as 1 percent, as Chinese developers dropped.

Futures on the Standard & Poor’s 500 Index lost 0.1 percent. In New York yesterday, the index rose 0.6 percent to 1,355.66. Federal Reserve Chairman Ben S. Bernanke signaled the Fed will maintain its record monetary stimulus after ending large-scale bond purchases in June, while the need to contain inflation means further easing is unlikely.

‘Cheap’ U.S. Stocks

“The U.S. will continue its easing monetary policy, as was expected,” said Toshio Sumitani, a strategist at Tokai Tokyo Research Center. “Stocks in the U.S. are rising with support from the easing policy, as they are cheap. Gains in U.S. stocks are positive for other stock markets.”

The Fed left its benchmark interest rate in a range of zero to 0.25 percent, where it’s been since December 2008.

Bernanke reinforced the view of the Federal Open Market Committee, which released its policy statement yesterday, that borrowing costs are likely to stay low for “an extended period.” The panel agreed to finish $600 billion of Treasury purchases in June and said surging commodity prices will probably have a transitory effect on inflation.

Honda, Hyundai

A gauge of consumer discretionary companies, which includes electronics and car manufacturers, had the biggest advance among the 10 industry groups in the MSCI Asia Pacific Index.

Honda, Japan’s second-biggest carmaker, climbed 2.9 percent to 3,190 yen in Tokyo. Toyota Motor Corp. (7203), the No. 1 automaker, increased 1.4 percent to 3,230 yen. LG Electronics Inc. (066570), the world’s third-largest maker of mobile phones, added 1.9 percent to 107,000 won in Seoul.

Hyundai Motor jumped 7.3 percent to 250,500 won, the biggest jump since September 2009. The company said first- quarter net income increased to 1.88 trillion won ($1.75 billion), compared with a revised 1.28 trillion won a year earlier, as sales in China, Europe and the U.S. climbed.

The Commerce Department said yesterday that orders for U.S. durable goods rose in March for a third consecutive month, showing businesses intend to keep spending to update equipment.

Advantest added 5.6 percent to 1,597 yen in Tokyo after saying it returned to profit in the year through March, posting net income of 3.16 billion yen ($39 million). Sales jumped 87 percent.

Komatsu, China Coal

Komatsu Ltd. (6301), the world’s second-largest maker of construction equipment, climbed 2.8 percent to 2,840 yen. The company said fourth-quarter net income increased more than threefold to 50.1 billion yen from 15.2 billion yen a year earlier as Asia’s booming economies boosted demand.

Fanuc Corp. (6954), Japan’s biggest maker of industrial robots, rose 1.4 percent to 13,450 yen. The company said full-year net income more than tripled to 120 billion yen from 37.5 billion yen a year earlier, with a 76 percent jump in sales.

China Coal Energy Co., the nation’s second-largest producer of the fuel, surged 4.3 percent to HK$10.80, the steepest gain in the Hang Seng Index, after reporting first-quarter profit increased 16 percent.

Nippon Electric Glass Co. jumped 8.6 percent to 1,223 yen, the biggest advance on the MSCI Asia Pacific Index after the glassmaker said full-year net income rose 25 percent to 68.6 billion yen on a 17 percent increase in sales.

China Rates

Computershare surged 7.7 percent to A$9.62 in Sydney. BNY Mellon, the world’s largest custody bank, agreed to sell its Shareowner Services business to the Australian company for $550 million.

Among stocks that declined, China Resources Land Ltd., a state-controlled developer, dropped 3 percent to HK$13.66, while China Overseas Land & Investment Ltd., controlled by the nation’s construction ministry, fell 2.2 percent to HK$15.14. Henderson Land Development Co., a Hong Kong-based developer that gets 16 percent of sales from China, lost 0.8 percent to HK$53.15.

China may raise interest rates early next month, with the “most likely” timing being May 2, following the May 1 holiday, Credit Suisse Group AG said. The brokerage also expects one more reserve ratio increase for banks “towards” late May after the government releases April inflation and lending figures, analyst Dong Tao, wrote in a report dated today.

The MSCI Asia Pacific Index increased just 0.1 percent this year through yesterday, compared with gains of 7.8 percent by the S&P 500 and 2.3 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark were valued at 13.2 times estimated earnings on average, compared with 13.8 times for the S&P 500 and 11.4 times for the Stoxx 600.

To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Anna Kitanaka in Tokyo at akitanaka@bloomberg.net.

To contact the editor responsible for this story: John McCluskey at j.mccluskey@bloomberg.net

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