Asian stocks outside China rose for a second day, following gains in U.S. shares, led by industrial and financial companies. Equities in Shanghai tumbled, posting the biggest weekly drop since June 2008.
Japan’s Topix index gained 0.9 percent as the central bank maintained a record stimulus program. Commonwealth Bank of Australia posted its biggest weekly advance since March, rising 3.8 percent. The Shanghai Composite Index fell 13 percent this week amid growing concern that the country’s longest-ever bull market has propelled valuations to unsustainable levels.
“With Chinese authorities wanting the share market to be strong but not manic, the latest share market correction means that it wouldn’t be surprising to see another People’s Bank of China rate cut or required reserve ratio reduction soon,” said Shane Oliver, Sydney-based global strategist at AMP Capital Investors Ltd. “Volatility is to be expected as it has risen a bit too far, too fast.”
The MSCI Asia Pacific Index climbed 0.4 percent to 147.05 as of 4:09 p.m. in Hong Kong, paring this week’s slide to 0.7 percent. The Standard & Poor’s 500 Index jumped 1 percent on Thursday in New York and the Nasdaq Composite Index closed at a record high after the Federal Reserve signaled it will continue to support the economy even as growth picks up.
Longest Bull Market
The Shanghai Composite, which reached the highest level since 2008 on June 12, has since tumbled 13 percent. Analysts are increasingly warning stocks will fall after the gauge more than doubled in the past 12 months.
The bull market, which turned 928 days old on Friday, is the longest since Chinese bourses opened for trading in 1990 and more than five times the average lifespan of the nation’s previous bull markets.
Outside of China, most markets in the region rose. Hong Kong’s Hang Seng Index climbed 0.3 percent and South Korea’s Kospi index added 0.3 percent. India’s S&P BSE Sensex Index gained 0.6 percent, heading for the first weekly gain in four weeks. Australia’s S&P/ASX 200 Index rose 1.3 percent, New Zealand’s NZX 50 Index advanced 0.6 percent and Singapore’s Straits Times Index added 0.2 percent.
The Hang Seng China Enterprises Index, a gauge of Chinese equities listed in the city, slid 0.6 percent.
In Japan, the central bank said it will continue to expand the monetary base at an annual pace of 80 trillion yen ($650 billion) as Kuroda seeks to spur inflation. All 35 economists in a Bloomberg survey forecast the BOJ would keep policy on hold.
BOJ Governor Haruhiko Kuroda triggered the steepest rally in the yen this year and prompted economists to push back their forecasts for extra easing when he said on June 10 that the real effective exchange rate was “very” weak and unlikely to fall further.
E-mini futures on the S&P 500 were little changed. Fed policy makers said Thursday that the world’s largest economy has picked up after its first-quarter slump, and that they expect inflation to accelerate gradually in the medium term. Yellen told reporters she still wants to see more “decisive” evidence of a lasting turnaround.
Reports in the U.S. showed the cost of living excluding food rose less than forecast in May and fewer Americans than estimated filed for unemployment benefits last week.
Euro-area finance ministers failed to reach a deal on Greece after meetings in Luxembourg, European Commission Vice President Valdis Dombrovskis said. Euro-area leaders will hold an emergency summit Monday.