Asian Stocks Advance as Technology, Consumer Shares Lead Gains

  • Reserve Bank of Australia keeps interest rates at record low
  • India’s Sensex rises to 17-month high as trading resumes

Asian stocks rose with the benchmark gauge headed for its highest level in more than a year on Monday, as technology and consumer companies advanced.

The MSCI Asia Pacific Index gained 0.7 percent to 140.88 as of 5 p.m. in Tokyo after opening slightly weaker. The gauge is on course to close at its highest level since August 2015 after weaker-than-expected U.S. payrolls data tempered speculation the Federal Reserve will raise interest rates in September. Australia’s central bank held its policy rate at a record low after cutting twice in the past four months.

“Monetary policy is going to remain easy around the world and that will continue to be supportive of risk assets,” said James Woods, a strategist at Rivkin Securities in Sydney. “The non-farm payrolls last week indicate there’s no rush for the Fed to raise rates. The Australian central bank will probably adopt a wait-and-see attitude before lowering rates further.”

Otsuka Corp. gained 4.2 percent, the most in two months, after Goldman Sachs Group Inc. and Mitsubishi UFJ Morgan Stanley raised their ratings on the computer hardware supplier. The Japanese company led a gauge of Asia-Pacific technology shares to the highest level since May 2015.

Australia’s S&P/ASX 200 Index closed down 0.3 percent after Reserve Bank of Australia Governor Glenn Stevens and his board left the cash rate at 1.5 percent Tuesday, as forecast by all 26 economists surveyed by Bloomberg. Traders are pricing in a 40 percent chance of further easing by the end of the year for Australia as they wait to see if U.S. rates rise in September.

Fed Watch

The odds of the Fed increasing borrowing costs this month fell to 32 percent from 42 percent on Aug. 26, when Fed Chair Janet Yellen signaled the case for higher rates is getting stronger. The MSCI Asian equity measure has been in a holding pattern since then as investors assess the health of the world’s biggest economy, with Friday’s jobs data raising speculation that patchy growth may prompt the Fed to stay pat for longer.

Futures on S&P 500 Index rose 0.1 percent. U.S. markets will resume trading Tuesday after being closed Monday for the Labor Day holiday. As central banks elsewhere weigh further easing, with Canada and the European Central Bank meeting this week, leaders of the Group of 20 nations are attending an annual summit in Hangzhou, China.

Japan’s Topix index gained 0.7 percent as the yen traded at 103.34 per dollar. South Korea’s Kospi index climbed 0.3 percent and New Zealand’s S&P/NZX 50 Index rose 0.2 percent to close at a record. Taiwan’s Taiex index added 1 percent.

India’s S&P BSE Sensex Index resumed trading after a holiday on Monday to climb 1.1 percent to a 17-month high after foreign funds bought a net $222 million of local equities last week, taking purchases this year to $6.1 billion. The Philippine Composite Index fell 0.6 percent to the lowest level since June.

Commodity trader Noble Group Ltd. surged 12 percent Singapore, the most in two months after Morgan Stanley resumed coverage of the company with an overweight rating. The Straits Times Index added 1.7 percent.

China Trading

Hong Kong’s Hang Seng Index climbed 0.6 percent to the highest in more than year with its 14-day relative strength gauge rising to 77, beyond the 70 level that suggests to some traders a rally is overdone. The gauge has surged 14 percent this quarter, outperforming the rest of Asia, buoyed by relatively cheap valuations and optimism in the property market. The Hang Seng China Enterprises Index of mainland Chinese shares listed in Hong Kong advanced 1.2 percent, while the Shanghai Composite Index gained 0.6 percent.

Raw material producers advanced in Asian trading as oil held on to gains after talks between Russia and Saudi Arabia over ways to stabilize the crude market fell short of an output freeze. Futures rose 0.2 percent in London after climbing 4.8 percent over the previous two sessions. Saudi Arabia’s Energy Minister Khalid Al-Falih said at the G-20 summit in China on Monday that there’s no need to freeze production.

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