- Japan’s Topix index climbs to three-month high on weaker yen
- Hong Kong real estate shares rally as home sales increase
Asian stocks rose, with the regional benchmark index heading for a one-year high, after weaker-than-expected payrolls data in the world’s biggest economy tempered speculation the Federal Reserve may raise interest rates as soon as September.
The MSCI Asia Pacific Index jumped 1.4 percent to 140.04 as of 4:09 p.m. in Hong Kong, heading for its highest close since August 2015. The S&P 500 Index rose 0.4 percent on Friday, halting a three-day decline, after the jobs report showed American employers added 151,000 workers to nonfarm payrolls in August, below the 180,000 projected by economists. That brought relief to investors, as odds of the Fed raising rates this month slid to 32 percent from 42 percent a week ago, while bets for tightening in December declined six percentage points to 59 percent.
“With the nonfarm payroll numbers, it looks like the Fed isn’t going to hike in September,” Vasu Menon, vice president for wealth management research at Oversea-Chinese Banking Corp. in Singapore, said on Bloomberg TV. “In the short-term, equity markets will be mildly positive because the Fed probably will only hike rates in December after the U.S. presidential elections. The markets will have a bit of breathing space.”
The gauge of Asian shares has been in a holding pattern since Fed Chair Janet Yellen indicated last month the central bank’s decision on raising the rate depends on the degree that data “continues to confirm” the outlook, indicating that the case for higher borrowing costs is getting stronger. Friday’s jobs data, along with weaker-than-forecast U.S. manufacturing on Thursday, raised speculation that patchy growth in the economy may prompt the Fed to sit pat for longer.
Hong Kong Rally
Hong Kong’s Hang Seng Index advanced 1.7 percent to a one-year high as property developers rallied after home sales rose in August to the highest level in 14 months. The city’s real estate market is especially sensitive to U.S. monetary policy, with a currency peg to the greenback ensuring the domestic interest rates follow those of the U.S. The Shanghai Composite Index rose 0.2 percent.
Japan’s Topix index added 0.2 percent to close at a three-month high with trading houses and electric-appliance producers providing the biggest boost to the benchmark gauge. The index pared an advance of as much as 1.2 percent late in the session Monday as the yen rebounded on comments by Bank of Japan Governor Haruhiko Kuroda. The central banker declined to rule out new initiatives to stoke inflation, but refrained from specifying what options are available.Though the Topix has climbed 12 percent from a June 24 low, it remains the second-worst performer among developed-market indexes this year as investors try to gauge the direction of monetary policy ahead of U.S. and Japanese meetings this month.
Taiwan’s Taiex index, South Korea’s Kospi index and Australia’s S&P/ASX 200 Index all climbed 1.1 percent. New Zealand’s S&P/NZX 50 Index increased 0.9 percent. Singapore’s Straits Times Index advanced 1.5 percent. The Philippine Stock Exchange Index slipped 0.6 percent.
Thai Stocks Retreat
Thailand’s SET Index fell 1.8 percent, heading for its biggest decline since April 5, on concern valuations have become expensive following a recent rally, according to Finansia Syrus Securities PCL. Shares on the gauge traded at 14.6 times estimated earnings, compared with an average multiple of 13.7 times in the past three years, according to data compiled by Bloomberg.
Alumina Ltd. shares jumped 8.4 percent in Sydney, extending gains for a second-day to cap its biggest two-day advance since February, amid speculation a settlement of a dispute with its joint-venture partner Alcoa Inc. may spur takeover interest in the Australian company. Mitsui OSK Lines Ltd. rose 6.6 percent in Tokyo, leading gains among shipping companies, amid hopes freight rates may recover after Hanjin Shipping Co. filed for court receivership last week. Hanjin Shipping tumbled 14 percent in Seoul as it resumed trading.
Futures on the S&P 500 Index added 0.1 percent on Monday. U.S. markets are shut on Monday for the Labor Day holiday.