Asia Stocks Rise as U.S. Home Sales Surge, Rate-Hike Bets Climb

  • Japanese shares advance as yen weakens against dollar
  • Hong Kong’s Hang Seng climbs 2.7% in Wednesday trading

Asian stocks rose, with the regional equities benchmark gauge rebounding from a seven-week low, after a surge in U.S. home sales fueled speculation the world’s biggest economy can withstand higher interest rates.

The MSCI Asia Pacific Index climbed 1.6 percent to 126.97 as of 4 p.m. in Hong Kong after closing on Tuesday at the lowest level since April 6. Japanese, Hong Kong and Indian shares led gains, as the Topix index added 1.2 percent with the yen trading at 110.04 a dollar after falling 0.7 percent Tuesday. A report showed U.S. new-home sales in April surged to the highest level in more than eight years. Odds for a Federal Reserve rate increase in June rose to 34 percent from 4 percent last Monday, with traders now expecting a better-than-even chance of an increase by July.

“Strong U.S. new home sales have added credence to the Fed’s claims that the U.S. economy may be strong enough for another rate hike in June or July,” said Angus Nicholson, a Melbourne-based market analyst at IG Ltd. “Japanese equities in particular are relishing the strong U.S. dollar.”

May is poised to be the worst month since January for the Asia Pacific index in what’s been a wild ride for investors this year. The regional gauge began 2016 with a 14 percent slump through a February low on concern a devaluation of the Chinese yuan would curb global growth and amid prospects for higher U.S. borrowing costs. It then rallied almost 20 percent through this year’s peak in April before retreating again. The measure has fallen 3.2 percent so far this month.

Mounting conviction that the Fed will boost borrowing costs some time in the next two months propelled the greenback higher against the yen, boosting shares at Japanese exporters. Honda Motor Co. added 2.4 percent and Toyota Motor Corp. increased 2.3 percent. Toyota said it’s investing in Uber Technologies Inc. as automakers race to align themselves with the fast-growing, ride-hailing industry. The companies will also work together on offering auto leases to Uber drivers.

Sony Corp. surged 6.5 percent, reversing this year’s losses, as investors ignored a weak profit forecast, looking instead to the company’s long-term prospects in entertainment and sensors needed for driverless cars. Net income will probably decline 46 percent in the 12 months ending March 2017 due to costs for repairs after the Kyushu earthquake, the company said.

Japanese shares were also buoyed by Prime Minister Shinzo Abe’s plans to announce a delay of the scheduled April 2017 sales tax hike after Japan’s Diet session ends June 1. The , the Yomiuri newspaper reported without providing attribution.

Malaysian Troubles

Traders in Malaysia will be watching moves in the ringgit as NAB strategist Julian Wee said the currency could weaken the fastest among its Asian peers on potential political instability from the 1Malaysia Development Bhd. scandal. Global probes related to the troubled Malaysian state fund have enmeshed the biggest casualty to date: a 143-year-old Swiss bank, BSI SA. The FTSE Bursa Malaysia KLCI Index fell 0.1 percent.

Australia’s S&P/ASX 200 Index advanced 1.5 percent and New Zealand’s S&P/NZX 50 Index gained 0.5 percent. South Korea’s Kospi index added 1.2 percent and Singapore’s Straits Times Index rose 0.8 percent and India’s S&P BSE SENSEX Index advanced 1.8 percent.

Brent crude rallied above $49 a barrel as copper headed for its highest close in a week, buoying commodity producers. BHP Billiton Ltd. climbed 2.8 percent and Rio Tinto Group rose 1.9 percent.

Taiwan’s Taiex Index advanced 1.2 percent. The country must seek more diverse trade partners apart from China, increase its presence in Southeast Asia and India, and seek to join regional agreements such as the Trans-Pacific Partnership, according to the island’s new economic affairs minister. Taiwan will release revised first-quarter GDP figures Friday.

The Shanghai Composite Index fell 0.2 percent, the only major gauge in the region to fall Wednesday. The Hang Seng China Enterprises Index of mainland firms listed in Hong Kong rose 2.8 percent, the most in six weeks. Shanghai 2345 Network Holding Group Co. soared 7.5 percent after Premier Li Keqiang said China will promote the use of big data and employ an “Internet Plus” strategy to help manufacturers.

Futures on the S&P 500 climbed 0.4 percent after the underlying gauge added 1.4 percent on Tuesday, the most since March 11. Investors will scrutinize comments from Fed Chair Janet Yellen later this week, as well as a monthly government jobs report due June 3. Crude oil futures advanced a second day amid speculation U.S. stockpiles dropped last week.

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