Asian Stocks Rally to Halt Six-Day Selloff Ahead of Fed Decision

Asian stocks gained, with the regional benchmark index posting its biggest advance since September, as investors awaited the Federal Reserve’s first interest rate increase in almost a decade.

The MSCI Asia Pacific Index climbed 2.2 percent to 129.54 as of 2:27 p.m. in London, its first rise in seven days. The gauge lost more than 4 percent in the previous six sessions, reaching the lowest level since Oct. 2. The Standard & Poor’s 500 Index capped its first back-to-back advance in more than a month as energy companies led a rally with crude oil.

Energy and raw-material companies led gains in Asia, while banks also rose, as concerns over commodities and junk-bond markets faded and investors focused on the Fed’s policy decision due in less than 12 hours. Traders are pricing in 78 percent odds that rates will be raised for the first time since 2006, ending the era of near-zero borrowing costs.

“Markets had time to prepare for this day, with investors winding back risks ahead of the event,” Tim Schroeders, a portfolio manager who helps oversee about $1 billion in equities at Pengana Capital Ltd. in Melbourne, said by phone. “What happens after the Fed rate hike is difficult to tell, especially since we’re coming into a quiet period around Christmas and New Year.”

U.S. data on Tuesday reinforced expectations for a gradual increase in rates, with the cost of living holding steady in November, underscoring scant inflation that is well below the policymaker’s goal. Tightening policy would solidify the Fed’s divergence from central banks in Europe and Japan.

Topix Gains

Japan’s Topix index increased 2.5 percent, it biggest gain since Sept. 30, as the yen weakened. Australia’s S&P/ASX 200 Index jumped 2.4 percent, while New Zealand’s S&P/NZX 50 Index climbed 0.5 percent. South Korea’s Kospi gained 1.9 percent. Taiwan’s Taiex advanced 1.4 percent. Hong Kong’s Hang Seng Index increased 2 percent, snapping its longest losing streak since 1984.

Chinese stocks in Hong Kong rallied the most in a month after valuations on the benchmark gauge fell to their lowest level relative to global peers in 12 years. The Hang Seng China Enterprises Index climbed 2.1 percent, the steepest advance since Nov. 4. PetroChina Co. and China Petroleum & Chemical Corp., which fell to their lowest levels in at least six years this week, surged at least 5 percent after the government signaled it won’t cut fuel prices. The Shanghai Composite Index gained 0.2 percent.

Singapore’s Straits Times Index added 0.9 percent. Noble Group Ltd. shares rallied 7.7 percent after Asia’s largest commodities trader said that it was in advanced talks to sell the rest of its agriculture unit, potentially bolstering its drive to raise cash and avoid a credit-rating cut to junk.

E-mini futures on the Standard & Poor’s 500 Index added 0.5 percent after the underlying measure climbed 1.1 percent on Tuesday.

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