Asian Stocks Advance as Japan's Topix Gains With Retreat of Yen

  • Lenders rally as BOJ cuts bank funds subject to negative rates
  • Nomura jumps on plan to shut European equity operations

Are Negative Rates Causing More Problems Than Solutions?

Asian stocks rose, led by Japanese equities as the yen retreated after a seven-day rally and financial shares surged.

The MSCI Asia Pacific Index gained 0.9 percent to 127.80 as of 5:03 p.m. in Tokyo. Japan’s Topix index jumped 1.5 percent as the yen slipped and the Bank of Japan reduced the portion of bank funds subject to negative interest rates. Alcoa Inc. kicked off the U.S. earnings season by cutting its outlook after net income declined.

Global equities are under pressure in April amid concern over the potency of central bank stimulus efforts and a selloff in Japanese shares. Stocks in Tokyo are among this year’s worst performers as a stronger yen weighs on exporters’ profit outlooks and investors question the country’s economic fundamentals.

“We’re going to see the BOJ do something more radical,” Rahul Chadha, co-chief investment officer at Mirae Asset Global Investments, told Bloomberg TV in Singapore. “The hope is you get some structural reforms and the patient responds to this medicine.”

The Topix Banks Index jumped 5.3 percent to lead gains among the 33 industry groups on the broader gauge. The yen weakened to 108.12 per dollar after climbing on Monday to the strongest since October 2014. The BOJ enlarged the share of new current-account funds that will be charged a zero percent rate.

“This isn’t a sustained weakening,” Nandini Ramakrishnan, a London-based strategist at JPMorgan Asset Management, told Bloomberg Radio. “It’s not a good sign for the Japanese equity market or for their inflationary hopes there,” adding that she has a less positive view on Tokyo shares.

Nomura Holdings Inc. jumped 7.4 percent, the most in two months, as a person with knowledge of the matter said the brokerage plans to shut its European equity operations.

Australia’s S&P/ASX 200 Index added 0.9 percent as banks gained. Singapore’s Straits Times Index added 0.1 percent and New Zealand’s S&P/NZX 50 Index closed little changed. South Korea’s Kospi index rose 0.6 percent and India’s S&P BSE Sensex Index added 0.2 percent. Hong Kong’s Hang Seng rose 0.3 percent.

Blackmores Ltd. posted the steepest two-day drop since 1987 as its chief executive officer said investors are overreacting to China’s tax changes on imported goods bought online. Shares of the vitamin maker lost 6.8 percent in Sydney, extending yesterday’s 13 percent slide. Bellamy’s Australia Ltd., which makes organic baby formula, fell 11 percent, while A2 Milk Co. declined 6.5 percent.

The Shanghai Composite Index fell 0.3 percent as Premier Li Keqiang flagged downward pressures on the world’s second-largest economy. Shares of the brokerage Shenwan Hongyuan Group Co. dropped after saying its net income nearly halved in the first quarter.

The International Monetary Fund on Tuesday will release its updated World Economic Outlook, which is likely to show a dip in the global growth forecast following a reduction in the previous projections in January. Managing Director Christine Lagarde said last week that expansion “remains too slow, too fragile, and risks to its durability are increasing.”

Futures on the Standard & Poor’s 500 Index fell 0.1 percent. As investors await fresh cues from corporate America, analysts are projecting first-quarter profits will contract 10 percent -- compared with calls for flat earnings growth at the start of the year -- including a 20 percent drop for banks. Still, for the first time in eight months, the pace at which they are cutting their estimates is slowing.

Alcoa reported slumping quarterly earnings and reduced its outlook for the aluminum and aerospace markets as it prepares to split itself into two companies.

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