Asian Stocks Climb After U.S. Rally on Employment Report

Asian stocks rose, with the regional benchmark index posting its longest stretch of gains this year, after jobs data spurred the biggest two-day rally for U.S. equities since October.

Toyota Motor Corp., the world’s biggest carmaker, climbed 1.6 percent to pace gains among Japanese exporters. Rio Tinto Group (RIO), the world’s second-largest mining company, advanced 1.6 percent in Sydney. Genting Singapore Plc and partner Landing International Development Ltd. rose after announcing plans to build a casino on South Korea’s Jeju island.

The MSCI Asia Pacific Index added 0.6 percent to 134.10 at 8:04 p.m. in Tokyo, rising for a fourth day. The gauge has climbed 3 percent from a five-month low on Feb. 4. Japan’s current-account deficit widened to a record in December, while China’s central bank signaled volatility in money-market interest rates will persist and borrowing costs will rise. Federal Reserve Chairman Janet Yellen will deliver her first semi-annual monetary testimony tomorrow.

“Things have bounced back, but there is not a lot of momentum behind that,” Matthew Sherwood, who helps manage about $25 billion as Sydney-based head of markets research at Perpetual Ltd., said by phone. “Yellen is probably going to pause on tapering within the next few meetings following recent poor labor market reports. There’s still a lot of question marks on the Japanese economy. China’s economic growth is going to moderate as the government tries to tighten liquidity.”

The Asia-Pacific equity benchmark dropped 4.6 percent in January for its worst start to a year since 2009 amid concern about the Fed’s stimulus cuts, China’s slowdown and volatility in developing markets. Global equity losses in 2014 peaked at $3 trillion on Feb. 4 and have since narrowed to $1.6 trillion, data compiled by Bloomberg show.

Record Deficit

Japan’s Topix index rose 1.3 percent as the yen weakened before the close of equity trading. The nation’s 638.6 billion yen ($6.3 billion) current-account shortfall surpassed November’s gap of 592.8 billion yen, the finance ministry said in Tokyo today.

China’s Shanghai Composite Index (SHCOMP) climbed 2 percent to its highest close since Jan. 2. Taiwan’s Taiex index added 0.1 percent. Australia’s S&P/ASX 200 Index advanced 1.1 percent, while New Zealand’s NZX 50 Index lost 0.2 percent. Singapore’s Straits Times Index gained 0.1 percent. Hong Kong’s Hang Seng Index retreated 0.3 percent. India’s S&P BSE Sensex Index dropped 0.2 percent, while South Korea’s Kospi index increased 0.1 percent.

“With confidence in global equities returning after concerns over emerging markets dissipated, we should expect selling pressure from January to finally subside,” Tim Radford, a strategist at Rivkin Securities in Sydney, said. That will “allow for some upside to eventuate in the near-term.”

U.S. Optimism

Futures on the S&P 500 declined 0.3 today. The equity benchmark rose 1.3 percent on Feb. 7 amid optimism U.S. economic growth is robust enough to weather stimulus cuts even as data showed weaker-than-forecast hiring.

The U.S. added 113,000 jobs in January, a Feb. 7 report showed, trailing the median estimate of 180,000 in a Bloomberg survey, while the jobless rate unexpectedly dropped to 6.6 percent. The weakest back-to-back gains in U.S. payrolls in three years are unlikely to prompt the Fed to shelve its strategy of gradually trimming bond purchases, according to economists.

“This is a lackluster report, but it’s not enough to take the Fed out of autopilot on tapering,” said Thomas Costerg, an economist at Standard Chartered Bank in New York. “They’ll take a broader look at the economy, not just at payrolls,” he said, as a “broad consensus” at the Fed favors cutting monthly bond buying by $10 billion at each policy meeting.

China Liquidity

The central bank last month said it will press on with a second reduction to its monthly bond buying, to $65 billion from $75 billion, citing an improving labor market.

China’s central bank said on Feb. 8 that reasonable volatility in money-market interest rates must be tolerated as it manages liquidity in the country’s financial system to rein in credit growth and speculative lending.

Japanese exporters advanced. Toyota rose 1.6 percent to 5,994 yen. Canon Inc. (7751), the world’s biggest camera maker, added 1 percent to 3,010 yen. Nintendo Co., the maker of Wii video-game consoles, jumped 5.4 percent to 12,105 yen.

Olympus Corp. (7733) jumped 7.2 percent to 3,335 yen in Tokyo, its biggest rally since May 2013. The maker of cameras and endoscopes reported third-quarter operating profit of 21.4 billion yen, compared with the average estimate of 19.2 billion yen from five analysts compiled by Bloomberg.

Earnings Performance

Of the 296 companies on the MSCI Asia Pacific Index that have reported quarterly earnings since the beginning of January and for which estimates are available, 52 percent beat profit expectations, according to data compiled by Bloomberg.

Raw-material producers advanced. Rio Tinto climbed 1.6 percent to A$67.02 in Sydney. BHP Billiton Ltd. (BHP), the world’s biggest mining company, rose 1.1 percent to A$36.50.

Genting Singapore gained 1.8 percent to S$1.42, while partner Landing International jumped 22 percent to 77 Hong Kong cents. The companies are investing $2.2 billion in a casino project in South Korea to draw Chinese gamblers.

BYD Co., the automaker backed by Warren Buffett’s Berkshire Hathaway Inc., jumped 4.6 percent to HK$39.95 in Hong Kong after China’s government said it will continue incentives for electric vehicles beyond 2015.

Asahi Glass Co. slid 6.7 percent to 544 yen in Tokyo, its lowest price since November 2012. The supplier of glass for the construction and automotive industries forecast full-year earnings that missed estimates.

To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net

To contact the editor responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net

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