Asian Stocks Gain as Policy Makers Signal More Stimulus
Asian stocks climbed, with the benchmark regional gauge heading for its biggest three-day gain this year, as global policy makers signaled they may take steps to stimulate economic growth. The MSCI Asia Pacific Index ticked higher as China cut interest rates after most markets closed.
BHP Billiton Ltd. (BHP), the world’s largest mining company, advanced 1.5 percent in Sydney as Australian employment unexpectedly rose in May, driven by hiring amid the nation’s minerals boom. Mitsubishi Corp., the No. 1 Japanese trading house, rose 1.2 percent and Komatsu Ltd., a mining-equipment maker, gained 2.1 percent in Tokyo as investors bought shares of companies with profits closely tied to economic growth.
The MSCI Asia-Pacific (MXAP) rose 1.5 percent to 113.33 as of 8:11 p.m. in Tokyo, poised for its biggest three-day gain since Dec. 5, with more than three shares advancing for every one that fell. The gauge is priced in U.S. dollars, which fell after China’s interest rate cut, boosting the relative value of stocks in the index.
The Asian benchmark gauge has dropped 12 percent from its peak this year on Feb. 29. amid concern growth is slowing in China and the U.S. as Europe’s debt crisis deepens.
“Any time central bankers give us a promise that they’re going to inject some more liquidity into the markets, risk assets start to rally, and that’s precisely what’s happened,” Arjuna Mahendran, Singapore-based head of Asia investment strategy at HSBC Private Bank, which manages about $556 billion, said in a Bloomberg TV interview. “We could have a risk rally going on for a while.”
Japan’s Nikkei 225 climbed 1.2 percent, South Korea’s Kospi Index advanced 2.6 percent as it resumed after a holiday yesterday. Hong Kong’s Hang Seng rose 0.9 percent. China’s benchmark Shanghai Composite Index slid 0.7 percent.
Australia’s S&P/ASX 200 Index (AS51) jumped 1.3 percent after a government report showed employers added 38,900 workers last month. Economists had forecast no change. The employment report came a day after data showed Australia’s economy expanded twice as fast as economists had forecast in the first quarter as resource investment surged.
Federal Reserve Vice Chairman Janet Yellen said slowing job growth and deteriorating financial-market conditions show the U.S. economy “remains vulnerable to setbacks” and may warrant additional monetary stimulus. Federal Reserve Bank of Atlanta President Dennis Lockhart said extending Operation Twist, the central bank’s stimulus program that lengthens maturities of debt on its balance sheet, is an “option on the table.”
Chinese Premier Wen Jiabao vowed last month to focus more on increasing growth after trade and domestic demand were below forecasts in April.
“The Chinese will take action to stimulate the economy and the Americans will similarly respond with an extension of Operation Twist or more quantitative easing,” said Prasad Patkar, who helps manage about $1 billion at Platypus Asset Management Ltd. in Sydney. “For a sustained rally, we need a period of stability where we’re not in a fire-fighting-crisis mode.”
Futures on the Standard & Poor’s 500 Index advanced 0.6 percent today. The gauge soared 2.3 percent yesterday, its biggest gain of the year.
The MSCI Asia-Pacific fell 2 percent this year through yesterday, compared with a 1.9 percent drop on the Stoxx Europe 600 Index and a 4.6 percent gain on the S&P 500. Declines in regional equity markets cut the average price of stocks on the Asian benchmark to 11.3 times estimated earnings. That compares with 12.6 times for the S&P 500 and a multiple of 10 for the Stoxx 600.
Export-related companies in Japan rose after the yen weakened, boosting overseas earnings prospects. Mitsubishi Corp. (8058) gained 1.2 percent to 1,552 yen and Komatsu advanced 2.1 percent to 1,884 yen. Sony Corp. (6758), Japan’s No. 1 exporter of consumer electronics, jumped 2 percent to 1,072 yen. Canon Inc., a Japanese camera maker that gets about 80 percent of revenue outside Japan, gained 3.4 percent to 3,185 yen.
Inpex Corp., Japan’s top energy explorer, advanced 3.3 percent to 454,000 yen as oil climbed for a fourth day. Cnooc Ltd. (883), China’s biggest offshore oil producer, gained 1.9 percent to HK$14.04.
Oil for July delivery increased 8 cents to $85.10 a barrel in electronic trading on the New York Mercantile Exchange at 4:04 p.m. Sydney time.
BHP Billiton advanced 1.5 percent to A$31.58. Rio Tinto Group (RIO), the world’s third-largest mining company, gained 2.2 percent to A$55.42. Posco, the world’s third-biggest steelmaker by output, rose 2.1 percent to 365,000 won in Seoul.
The S&P GSCI gauge of commodities gained 1.3 percent yesterday.
Ricoh Co. gained 4.1 percent to 591 yen in Tokyo after Deutsche Bank AG advised buying shares of the imaging company.
Brambles Ltd. (BXB), the world’s largest supplier of warehouse pallets, fell 5 percent to A$6.42 in Sydney after scrapping the sale of a unit and selling new stock at a discount.
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