Asian Stocks Track Global Advance as Japan Erases Brexit Losses

Global Markets: How Long Will the Rally Last?
  • Chinese shares in Hong Kong climb to highest in a month
  • Dow rises to a record; global stock gauge shrugs off U.K. vote

Asian stocks climbed, with the regional benchmark index heading toward its biggest three-day rally since April, as Japanese shares erased their Brexit losses amid signs the government will add more stimulus.

The MSCI Asia Pacific Index gained 0.8 percent to 132.80 as of 4:07 p.m. in Hong Kong and is up 3.5 percent this week. Japan’s Topix index added 1.1 percent, taking gains since July 8 to 7.5 percent, the biggest three-day advance since August 2015. A gauge of Chinese shares in Hong Kong climbed to a one-month high.

Global stocks have erased losses sparked by the U.K.’s vote to leave the European Union and U.S. equity indexes are at record highs as the prospect of central banks and governments stepping up stimulus spurs demand for commodities and other risk assets. Investors are betting the Bank of England will announce a rate cut this Thursday, while Japanese Prime Minister Shinzo Abe said he planned to add fiscal spending following his party’s election victory. Malaysia unexpectedly lowered borrowing costs Wednesday.

“Risk assets are rallying, driven by renewed hopes of monetary and fiscal stimulus,” said James Woods, a strategist at Rivkin Securities in Sydney. “The rally looks sustainable, especially if the BOE cuts rates this Thursday. Abe will definitely add some kind of fiscal stimulus to boost the Japanese economy.”

China Stability

The Hang Seng China Enterprises Index of mainland shares traded in Hong Kong climbed 0.6 percent, while the city’s benchmark Hang Seng Index added 0.5 percent. The Shanghai Composite Index advanced 0.4 percent. Chinese equities are rising amid speculation the nation’s leaders are taking steps to support investor sentiment.

Chinese exports fell 4.8 percent in June from a year earlier and imports dropped 8.4 percent to leave a trade surplus of $48.11 billion, government data released Wednesday showed. Trade in yuan terms looked better, with exports eking a small gain, reflecting the impact of a weakening currency. The yuan has fallen for five straight weeks, the longest losing streak this year, suggesting policy makers are more tolerant of further weakness.

The FTSE Bursa Malaysia KLCI Index rose 0.3 percent to a one-month high. The nation’s central bank unexpectedly cut interest rates for the first time in seven years, joining Asian counterparts from Indonesia to Taiwan that have eased policy this year to bolster their economies as global risks mount.

Regional Gauges

South Korea’s Kospi index added 0.7 percent, as did Australia’s S&P/ASX 200 Index. Taiwan’s Taiex index gained 0.2 percent, Singapore’s Straits Times Index advanced 0.2 percent and Thailand’s SET Index rose 0.4 percent, extending a bull market. New Zealand’s S&P/NZX 50 Index fell 0.2 percent.

BHP Billiton Ltd. jumped 3.3 percent in Sydney, pacing gains among raw-material producers, as copper rallied to the highest level since late April. Posco climbed 6.8 percent in Seoul and Hyundai Steel Co. advanced 10 percent as the steelmakers are expected to benefit from China’s move to curb output. Yamaha Motor Co. surged 9.8 percent in Tokyo after the operator of the Nikkei 225 Stock Average said the motorcycle maker will replace Sharp Corp. in the equity measure.

Futures on the S&P 500 Index were little changed. The Dow Jones Industrial Average climbed 0.7 percent, joining the S&P 500 Index in closing at an all-time high as crude rallied and Alcoa Inc.’s results bolstered optimism at the start of earnings season.

West Texas Intermediate crude oil fell 1.2 percent on Wednesday after rising 4.6 percent the day before in its biggest gain in three months.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE