Asia Stocks Rise as Yellen's Dovish Comments Lift Risk Appetite

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  • Fed Chair signals key rates likely to stay lower for longer
  • Energy, finance companies lead gains across Asia Pacific

Asian stocks advanced, led by Chinese equities, after Federal Reserve Chair Janet Yellen signaled the U.S. central bank remains wary of raising interest rates, bolstering the appeal of riskier assets.

The MSCI Asia Pacific Index added 0.9 percent to 128.96 as of 5:05 p.m. in Tokyo, led by energy and finance shares. The Shanghai Composite Index surpassed the 3,000 level after Bank of Communications Co. and China Petroleum & Chemical Corp. posted better-than-expected earnings. Hong Kong’s Hang Seng Index gained 2.2 percent, while equity indexes from India, Thailand and Taiwan climbed at least 1.4 percent. The Topix index fell in Tokyo after Yellen’s comments strengthened the yen, souring the outlook for Japanese exporters.

The MSCI Asia Pacific gauge is headed for its biggest monthly increase since October, climbing 8.2 percent to pare its quarterly loss to 2.3 percent. It is appropriate for U.S. central bankers to “proceed cautiously” in raising rates because the global economy presents heightened risks, Yellen said in a speech to the Economic Club of New York. The yen traded at 112.18 after strengthening 0.7 percent Tuesday.

“For the first time in a long time, Janet Yellen speaks and markets go up,” said Niv Dagan, executive director at Peak Asset Management LLC in Melbourne. “It is clear that U.S. interest rates won’t rise any time soon.”

Yellen’s comments helped the Standard & Poor’s 500 Index rise 0.6 percent, its biggest jump in more than two weeks, erasing this year’s losses. E-mini futures on the gauge added 0.5 percent.

Rate Odds

Traders are now pricing in no chance of a U.S. rate increase in April, while odds for June slid to 28 percent from 38 percent on Monday. The probability of higher borrowing costs doesn’t rise above 50 percent until November.

Australia’s S&P/ASX 200 Index climbed 0.1 percent. South Korea’s Kospi index rose 0.4 percent and New Zealand’s S&P/NZX 50 Index added 0.6 percent. Singapore’s Straits Times Index rose 1.8 percent.

The FTSE Bursa Malaysia KLCI Index increased 0.1 percent, extending the world’s longest bull-market run. The gauge has more than doubled from its 2008 lows without succumbing to a 20 percent drop.

Bank of Communications Co. climbed 4.1 percent in Hong Kong after reporting an unexpected increase in profit. China Petroleum & Chemical Corp. jumped the most in a month as profit from oil refining helped offset lower crude prices.

China Earnings

Bocom was the first among China’s five biggest banks to report earnings. About 60 percent of the companies in the Shanghai index that have reported annual results so far have trailed analysts’ estimates. China International Capital Corp. increased its 2016 profit growth forecasts for A-share companies to 5.1 percent from the previous estimate of 4 percent.

Takata Corp. plunged 19 percent after a Bloomberg report said the auto-industry supplier estimates that a comprehensive callback of its airbag inflators would total about 2.7 trillion yen ($24 billion).

Japanese exporters declined as the yen gained. Honda Motor Co. dropped 3.6 percent and Toyota Motor Corp. slid 2.5 percent. The country’s Topix index dropped 1.6 percent.