Asian stocks rose after the Bank of Japan said it would maintain its stimulus program and weak U.S. retail sales fueled bets the Federal Reserve won’t raise interest rates in September. Mainland Chinese shares slumped.
Advantech Co. surged by a record 9.9 percent in Taipei following a report on the computer maker’s outlook for the third quarter. Toyota Motor Corp. climbed 0.9 percent in Tokyo, the biggest contributor to gains on the regional gauge. The Shanghai Composite lost 3 percent after economic data that topped economist estimates failed to boost investor confidence in a stock market that’s slumped 25 percent over the past month.
The MSCI Asia Pacific Index added 0.2 percent to 143.80 as of 3:03 p.m. in Hong Kong. Sales at American retailers unexpectedly dropped in June, curbing optimism over the strength of a rebound in consumer spending. The BOJ said it will continue to expand the monetary base at an annual pace of 80 trillion yen ($648 billion).
Monetary policy will remain “looser for longer in Japan, looser for longer in the U.S.,” Bob Janjuah, London-based strategist at Nomura Holdings Inc., told Bloomberg TV. “I don’t think the Fed is going to have to hike for at least a year.”
Japan’s Topix index rose 0.5 percent. The BOJ lowered its inflation projection for the fiscal year through March 2016 to 0.7 percent from 0.8 percent and forecast 1.9 percent for the following year.
Signs of Improvement
While the BOJ’s 2 percent goal remains distant, officials are looking beyond disappointing output and export data and see a tight labor market and wage gains as signs of improvement, people familiar with the discussions said earlier this month. A majority of economists surveyed by Bloomberg doubt that inflation will pick up as the BOJ forecasts and predict another boost in stimulus.
E-mini futures on the Standard & Poor’s 500 Index added 0.1 percent on Wednesday after the underlying gauge rose 0.5 percent on Tuesday. The decline in retail sales may push economists to lower second-quarter growth forecasts as consumer spending accounts for about 70 percent of the economy.
The probability of the Fed raising rates at its September meeting slipped to 27 percent, down from 35 percent on Monday, futures data compiled by Bloomberg showed. For December, the odds of a hike fell to 63 percent from 69 percent. Fed officials in June forecast the central bank would raise borrowing costs twice this year.
Growth “has been slow enough that the Fed are obviously going to have to consider putting off rate hikes until later in the year,” Bruce McCain, chief investment strategist at the private-banking unit of KeyCorp in Cleveland, told Bloomberg TV. His firm oversees more than $25 billion in assets. “We’re telling investors to hold steady and if they’re underweight in equities to do some selective buying.”
Singapore’s Straits Times Index climbed 0.5 percent and Taiwan’s Taiex Index gained 0.1 percent. Australia’s S&P/ASX 200 Index added 1.1 percent and New Zealand’s NZX 50 Index rose 1 percent. South Korea’s Kospi index increased 0.6 percent.
Markets in China declined. With 689 stocks halted on mainland exchanges and another 790 falling by the 10 percent daily limit, sellers were locked out of about 50 percent of the the Chinese market. The Hang Seng Index slid 0.4 percent and the Hang Seng China Enterprises Index declined 1.8 percent.
Chinese gross domestic product was unchanged from the first quarter and in line with the government’s annual target. Industrial output in June rose 6.8 percent, while fixed-asset investment increased 11.4 percent in the first half, beating estimates, the National Bureau of Statistics data also showed. Retail sales increased 10.6 percent in June, topping a median forecast of 10.2 percent.