Asian stocks outside Japan fell, paring the biggest weekly advance in more than a month, after Federal Reserve policy makers said they will probably end their $85 billion monthly bond-purchase program sometime this year. Japanese equities jumped as markets reopened from holidays.
Rio Tinto Group, the world’s second-largest mining company, dropped 1 percent in Sydney as metals prices fell. Toyota Motor Corp. surged 6.4 percent as the yen weakened to the lowest level against the dollar since July 2010, boosting the earnings outlook for exporters. Japan Exchange Group Inc. fell 9.7 percent in its Tokyo trading debut after the merger between Osaka Securities Exchange Co. and Tokyo Stock Exchange Group.
The MSCI Asia Pacific Excluding Japan Index declined 0.6 percent to 475.68 as of 6:21 p.m. in Tokyo, trimming the week’s advance to 2 percent. Japan’s Nikkei 225 Stock Average gained 2.8 percent, gaining the most on an opening day since 2002, after U.S. lawmakers passed a bill averting spending cuts and tax increases scheduled to come into effect this year.
“This has been more of a relief rally than anything else,” said James Lindsay, Auckland-based equity fund manager at Tyndall Investment Management Ltd., which oversees about $23 billion. “The hard yards are still to come. U.S. economic data remains pretty mixed.”
Four years after cutting the main interest rate to near zero, U.S. policy makers have been expanding their third round of so-called quantitative easing to boost economic growth and cut the jobless rate, now at 7.7 percent.
Minutes, released yesterday in Washington, show a divide among Federal Open Market Committee participants on how long bond purchases should last. Participants who provided estimates were “approximately evenly divided” between those who said it would be appropriate to end the purchases around mid-2013 and those who said they should continue beyond that date.
Japanese exporters soared, pushing the Nikkei 225 to its highest close since March 2011. Toyota Motor gained 6.4 percent to 4,260 yen and Nissan Motor Co. climbed 5.3 percent to 854 yen. Canon Inc., the world’s biggest camera maker, rose 2.4 percent to 3,420 yen.
Japanese equities began 2013 trading today following a four-day holiday. The Nikkei 225 rose 23 percent last year, accelerating from Nov. 14 when the government said it would call elections in December. The pro-stimulus Liberal Democratic Party won the general election, pledging to do more to fight deflation and spur the economy. The yen’s weakness has bolstered the nation’s exporters amid speculation new Prime Minister Shinzo Abe will push the central bank to buy more bonds.
“There is a very large fiscal stimulus program in the works, there’s a very large monetary stimulus program in the works and we’ve had a big move in the yen,” Nicholas Smith, a strategist at CLSA Asia-Pacific Markets Ltd. in Tokyo, said in a Bloomberg Television interview with Susan Li. “Companies are lean and mean and are going to have a pretty impressive profit recovery.”
Japan Exchange, created by the merger of Japan’s two biggest bourses, fell 9.7 percent to 3,885 yen in its first day of trading on the Tokyo Stock Exchange. The tie-up is part of a government policy to reinvigorate the country’s financial markets.
Sharp Corp. dropped 2.6 percent to 295 yen after the Yomiuri newspaper reported the loss-making television maker may raise 100 billion yen ($1.1 billion).
Global equities have climbed in 2013 as U.S. lawmakers passed a bill averting spending cuts and tax increases scheduled to come into effect this year. The Standard & Poor’s 500 Index yesterday rose within one point of its highest closing level in five years before retreating. Futures on the S&P 500 added 0.1 percent today.
Raw-material shares posted the largest declines among 10 industry groups on the Asia excluding Japan equities gauge. Rio Tinto lost 1 percent to A$68.55 and BHP Billiton Ltd., the world’s largest mining company, fell 0.6 percent to A$37.91 in Sydney. Zijin Mining Group Co., China’s biggest gold miner by market value, fell 2.5 percent to HK$3.08 in Hong Kong. The London Metals Exchange Index of six industrial metals sank 1.2 percent yesterday.
Australia’s S&P/ASX 200 Index and South Korea’s Kospi Index both slid 0.4 percent. Hong Kong’s Hang Seng Index lost 0.3 percent. China’s Shanghai Composite gained 0.4 percent as the market reopened for 2013 trading.
The MSCI Asia Pacific Index, which includes Japan, surged 14 percent in 2012 as central banks from the U.S., Europe, Japan and China took action to spur economic growth. The Asia Pacific gauge traded at 14.1 times average estimated earnings, compared with 13.1 for the Standard & Poor’s 500 Index and 11.9 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.