Asian Stocks Climb to January High as China, Japan Shares Rally

  • Materials, financial shares lead gains among industry groups
  • Shanghai, Hong Kong, Tokyo indexes advance more than 3%

Asian stocks rose toward the highest level in almost two months as Japanese equities jumped on a weaker yen and speculation that China will announce measures to boost growth at legislative meetings this week spurred a rally for Shanghai shares.

The MSCI Asia Pacific Index climbed 2.8 percent to 123.29 as of 5:07 p.m. in Tokyo, with materials and financial companies leading gains. Japan’s Topix index jumped 3.7 percent after the yen slid for a second day and U.S. data signaled manufacturing in the world’s largest economy may be stabilizing. Faster-than-forecast economic growth lifted Australian equities. The Shanghai Composite Index surged the most in four months. The Asia Pacific gauge has jumped 9.1 percent from this year’s low on Feb. 12., led by commodity shares.

“We are getting a bit of stability in markets,” said Nader Naeimi, Sydney-based head of dynamic markets at AMP Capital Investors Ltd., which oversees about $115 billion. “Most of the yen strength is behind us and most of the panic is behind us. People are underestimating just how much ammunition central banks have. U.S. growth is slow but steady.”

Equities remain lower in 2016 despite rally

Futures on the Standard & Poor’s 500 Index were little changed as Donald Trump and Hillary Clinton solidified their positions in the race to their parties’ presidential nominations. The underlying equity measure jumped 2.4 percent on Tuesday, while the Nasdaq 100 Index had its best day since August, as reports showed factory activity in February shrank less than forecast and spending on construction projects rose the most since May.

The Topix climbed for a second day as Toyota Motor Corp. rose 3.5 percent to be the single largest boost to the benchmark index. Singapore’s Straits Times Index added 1.9 percent and South Korea’s Kospi index advanced 1.6 percent. Australia’s S&P/ASX 200 Index rose 2 percent after the country’s growth beat estimates in the final three months of last year. New Zealand’s S&P/NZX 50 Index gained 0.5 percent.

India’s S&P BSE Sensex rose 1.8 percent, set for its steepest two-day rally since May 2014, as state-run banks surged after the central bank eased rules allowing lenders to bolster capital ratios. State Bank of India and Bank of Baroda jumped more than 8 percent each. The gauge is rebounding from its biggest monthly loss since November 2011 as optimism over the government’s budget increased and speculation mounted that the Reserve Bank of India would lower interest rates after Prime Minister Narendra Modi stuck with the budget deficit targets.

China Rallies

The Shanghai Composite surged 4.3 percent. Hong Kong’s Hang Seng Index added 3.1 percent and the Hang Seng China Enterprises Index rallied 3.8 percent. Pressure is building on the government to follow up on Monday’s cut in lenders’ reserve-requirement ratios with more stimulus after data this week showed a deterioration in manufacturing. 

The National People’s Congress, where delegates will sign off on a new five-year economic plan, begins on March 5. The economic slowdown has been a trigger for the Shanghai Composite’s 23 percent slump this year through Tuesday, the worst performance among 93 global equity indexes.

Hong Kong Exchanges & Clearing Ltd., the most valuable exchange operator in Asia, climbed 3.5 percent after saying full-year earnings rose to a record on higher trading turnover. China Resources Beer (Holdings) Co. soared 18 percent in Hong Kong after agreeing to buy out the remaining stake in Snow Breweries, its Chinese joint venture with SABMiller Plc, for $1.6 billion. The deal will help smooth the way for Anheuser-Busch InBev NV’s takeover of SABMiller.

Super Tuesday

Trump exploited a divided Republican Party to take at least seven states as part of a commanding Super Tuesday showing, even as Senator Ted Cruz of Texas managed to win his home state and neighboring Oklahoma to keep his campaign alive. Clinton delivered a decisive performance against Bernie Sanders in Democratic primaries across a swath of U.S. states to give her an overwhelming lead.

Investors are also assessing economic releases to gauge the possible trajectory of interest-rate increases before the Federal Reserve’s next decision on March 16, with the government’s monthly jobs report due on March 4.

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