Asian stocks rose, sending the regional equities benchmark gauge toward the biggest two-day gain in more than a month, as energy shares rallied with oil and optimism grew the U.S. economy is strong enough for increased interest rates.
The MSCI Asia Pacific Index climbed 0.2 percent to 127.09 as of 4:25 p.m. in Hong Kong, after a global rally sent U.S. equities to the highest level in almost a month. The gauge jumped 1.5 percent Wednesday, the most since April 19, as stocks rebounded from a seven-week low. The MSCI All Country World Index gained for a third day as increasing signs of strength in the world’s biggest economy tempered anxiety over the Federal Reserve’s plans to raise interest rates as early as next month.
“Markets are now more accepting of a U.S. rate increase,” said Mitsushige Akino, a Tokyo-based executive officer at Ichiyoshi Asset Management Co. “The thought is that an increase won’t stop the U.S. economy from growing, but if the global economy slows, they have the means to change their policy.”
Hawkish commentary from Fed officials on the back of last week’s policy-meeting minutes, along with improving economic figures, led to speculation the central bank may increase rates soon. Odds for a Federal Reserve rate hike in June rose to 34 percent from 4 percent last Monday, with traders now expecting a better-than-even chance of an increase by July. Fed Chair Janet Yellen is scheduled to speak at Harvard on Friday, after the closure of Asian and European markets.
Asian equities are bouncing back after dropping 6.8 percent from an April high through Tuesday. Investors have been whipsawed this year, with the regional gauge slumping 14 percent through a February low on concern a devaluation of the Chinese yuan would curb global growth and amid prospects for higher U.S. borrowing costs. It then rallied almost 20 percent through this year’s peak in April before retreating again.
Energy shares had the biggest gains in the MSCI Asia Pacific gauge, jumping 1.4 percent. Crude oil neared $50 a barrel after a government report showed that U.S. crude inventories and production declined, easing concern over a global glut in the commodity.
Australia’s S&P/ASX 200 Index added 0.3 percent and New Zealand’s S&P/NZX 50 Index gained 0.6 percent. South Korea’s Kospi index fell 0.2 percent. Singapore’s Straits Times Index rose 0.6 percent and India’s S&P BSE SENSEX Index jumped 1.1 percent. Benchmark indexes in Vietnam and the Philippines each lost 1.2 percent.
Hong Kong’s Hang Seng Index rose 0.1 percent. The Hang Seng China Enterprises Index slipped 0.1 percent, after the gauge soared 2.8 percent Wednesday, the most in six weeks. The Shanghai Composite Index gained 0.3 percent.
The Topix index closed little changed after erasing a gain of 1.1 percent. The Nikkei 225 Stock Average added 0.1 percent. The early rally in Japanese shares faded as the yen climbed against the dollar following two days of losses.
Futures on the S&P 500 climbed 0.1 percent after the underlying gauge added 0.7 percent on Wednesday to the highest level since April 27. The index notched up a set of consecutive advances after seven sessions of swinging from gains to losses.