Asia Stocks Rally to Highest Since May Amid U.S. Optimism
Asian stocks rose, with the regional index rallying to its highest level since May, as U.S. Senate leaders said they’re making progress in talks to reopen the U.S. government and avoid a breach of the debt limit this week.
James Hardie Industries SE, a maker of building materials that gets about 70 percent of sales from the U.S., increased 2.1 percent in Sydney. SJM Holdings Ltd. (880), Asia’s biggest casino operator, jumped to a record high after Macquarie Group Ltd. raised its growth outlook for Macau’s gaming market. Hankook Tire Co., South Korea’s No. 1 tiremaker, advanced 1.9 percent after announcing plans to build its first factory in the U.S.
The MSCI Asia Pacific Index gained 0.4 percent to 141.38 as of 8:16 p.m. in Tokyo, with about five shares rising for every three that fell. Senate Majority Leader Harry Reid said “tremendous progress” had been made, though “we are not there yet.” Leaders are working on a deal to suspend the debt ceiling through Feb. 7 and fund the government through Jan. 15, a person familiar with the talks said, speaking on the condition of anonymity.
“It looks like the door is now open for compromise,” Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages about $130 billion, told Bloomberg TV. “The deadline is nearing and we’ll get through that. The volatility caused by this debt-ceiling debate will be with us until next year.”
Australia’s S&P/ASX 200 Index advanced 1 percent. The nation’s central bank repeated it retains the option of reducing interest rates as policy makers gauge the impact of “substantial” stimulus on the economy, minutes of its Oct. 1 meeting showed.
South Korea’s Kospi index gained 1 percent. New Zealand’s NZX 50 Index added 0.3 percent. Hong Kong’s Hang Seng Index rose 0.5 percent. China’s Shanghai Composite Index slipped 0.2 percent. Japan’s Topix (TPX) increased less than 0.1 percent, paring gains of as much as 0.7 percent. Markets in Singapore, Indonesia, Malaysia and the Philippines were shut for holidays today.
The MSCI Asia Pacific Index climbed 1.3 percent last week amid optimism U.S. lawmakers were moving closer to resolving the debt impasse. The gauge is trading at 13.6 times estimated earnings, compared with 15.5 for the Standard & Poor’s 500 Index and 14.4 for the Stoxx Europe 600 Index.
S&P 500 futures added 0.1 percent today. The equities gauge rose 0.4 percent yesterday amid signs lawmakers may reach a deal before the government loses its ability to borrow money.
President Barack Obama postponed a meeting with congressional leaders to give lawmakers more time to reach an agreement. Senate Minority Leader, Republican Mitch McConnell, said he shares Reid’s optimism after talks in Washington.
The possible deal could face procedural delays in the Senate and an uncertain path in the Republican-controlled House of Representatives, where Speaker John Boehner would have to decide whether to allow a vote or make changes. Should Congress fail to act, the U.S. government would run out of borrowing authority in two days and start missing debt payments sometime between Oct. 22 and Oct. 31, according to the Congressional Budget Office.
“It’s positive to see that they’re negotiating and trying to come out with some form of a deal,” said Timothy Radford, a Sydney-based strategist at brokerage Rivkin Securities. “We should probably get some deal by Thursday. That should provide some buying support for the market.”
Exporters advanced. James Hardie climbed 2.1 percent to A$10.72 in Sydney. AU Optronics Corp. (2409), which makes liquid crystal display screens used in electronics devices, jumped 4.2 percent to NT$10 in Taipei. Techtronic Industries Co., a maker of power tools that gets about 73 percent of sales from North America, climbed 4 percent to HK$20.55 in Hong Kong.
Casino shares rallied after Macquarie raised its growth outlook for Macau’s gaming market to 18 percent this year from 13 percent. SJM surged 6.7 percent to HK$24.05. Wynn Macau Ltd., a unit of billionaire Steve Wynn’s gaming company, jumped 4.6 percent to HK$29.70. Both shares closed at record highs.
Mazda Motor Corp. (7261) gained 3 percent to 443 yen in Tokyo. Macquarie raised its rating on the carmaker to outperform from neutral, saying new models will boost earnings. BNP Paribas increased its recommendation to buy from reduce.
Hankook Tire rose 1.9 percent to 64,100 won in Seoul. The company said yesterday it will invest $800 million to build its first factory in the U.S. as automakers stay on track for a fifth straight year of growth.
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