Asian Stocks Rally Amid Global Rebound on Stimulus Speculation

Updated on
  • Tokyo volatility gauge declines to pre-Brexit levels
  • Jakarta Composite jumps on tax amnesty, enters bull market

Asian stocks rose with oil prices as a rally in global equities gathered steam amid optimism that policy makers will introduce measures to limit the economic fallout from U.K. leaving the European Union.

The MSCI Asia Pacific Index advanced 1.8 percent to 127.64 as of 5:02 p.m. in Hong Kong. A gauge of global equities climbed toward its steepest two-day gain in almost four months and measures of volatility receded as investors watched for signs that central banks and governments will help ease the post-Brexit market turmoil. Japanese shares rebounded, Philippine stocks reached a 13-month high and Indonesia entered a bull market.

Federal Reserve Governor Jerome Powell said global risks have shifted further to the downside after Britain’s vote, introducing new uncertainties that may merit reassessing monetary policy. Japan’s Prime Minister Shinzo Abe said Wednesday he will mobilize all possible measures, while South Korea on Tuesday proposed a package of fiscal stimulus. Investors are awaiting details on the U.K.’s plan to leave the EU amid concern the move could disrupt the global economic recovery.

“Risk sentiment has improved,” said Suan Teck Kin an economist at United Overseas Bank Ltd. in Singapore. “The impact on Asia from an economic point of view is not that significant from the U.K. unless the separation has a negative impact on a broader EU.”

The Nikkei Stock Average Volatility Index declined for a third day, sliding 12 percent on Wednesday and reversing gains from last week when markets were roiled by the Brexit vote victory. The CBOE S&P 500 Volatility Index tumbled by most since August 2011 on Tuesday.

Japan’s Topix index increased 1.9 percent, led by financial companies and steel producers, as the yen traded at 102.27 to the dollar. South Korea’s Kospi index rose 1 percent, as did Taiwan’s Taiex index. Australia’s S&P/ASX 200 Index added 0.8 percent, New Zealand’s S&P/NZX 50 Index climbed 1.3 percent and Singapore’s Straits Times Index jumped 1.3 percent. Hong Kong’s Hang Seng Index ended a three-day drop.

The Jakarta Composite Index jumped 2 percent, bringing gains from a closing low in September above 20 percent, entering what traders consider a bull market. Indonesia’s parliament on Tuesday approved a tax amnesty that the government said will draw in billions of dollars needed to finance a widening budget as it steps up infrastructure spending to spur economic growth.

China’s Shanghai Composite Index climbed for a third day, making it one of the world’s best performers since the U.K.’s shock vote to leave the EU. The market’s dominance by local traders helped insulate the nation’s shares from global turmoil in the aftermath of Brexit.

BHP, Sony

BHP Billiton Ltd., Australia’s biggest energy producer and the world’s largest mining company, rose 1.5 percent in Sydney, pacing gains among raw-material producers after oil and most metals advanced. Innolux Corp., a supplier of screens used in Apple Inc.’s iPhones, jumped 9.3 percent in Taipei after Credit Suisse Group AG upgraded the stock to outperform on speculation panel prices will increase. Sony Corp. climbed 4.8 percent in Tokyo after the consumer electronics maker said it expects the profitability of its games division to improve with the launch of a virtual-reality headset.

Futures on the S&P 500 Index added 0.3 percent. The U.S. equity benchmark index climbed 1.8 percent on Tuesday, the most in nearly four months and rising for the first time since Britons voted to leave the EU.

West Texas Intermediate crude for August delivery rose 1.2 percent, heading for its second day of advance.