Asian Stocks Rise Amid Japan Stimulus Report; Shanghai Retreats

  • Indonesian stock gauge advances after cabinet reshuffle
  • Shanghai Composite Index records worst drop in six weeks

What's Included in Japan's $265 Billion Stimulus Plan?

Asian stocks climbed for a third day as Japanese shares rallied on a report that the government is preparing a stimulus package worth more than 28 trillion yen ($265 billion). Chinese equities in Shanghai tumbled the most in six weeks.

The MSCI Asia Pacific Index added 0.2 percent to 134.84 as of 4:10 p.m. in Hong Kong. The Topix index rose 1.1 percent as Prime Minister Shinzo Abe, speaking in the southern city of Fukuoka on Wednesday, said the measures would be compiled next week, Kyodo News reported. The Shanghai Composite Index was the worst benchmark decliner in Asia after a report about possible curbs on wealth-management products added to concern that regulatory efforts to reduce risks in the financial system will limit flows into equities.

Asian shares are poised for the best monthly gain since March amid bets that central banks around the world will take steps to limit any fallout from the U.K.’s vote to exit the European Union. The Bank of Japan is widely expected to add to stimulus at the end of a two-day meeting on July 29. The Federal Reserve is likely to leave interest rates unchanged at the end of its meeting Wednesday, even as futures traders are predicting a 49 percent chance borrowing costs will rise by December.

“Central bank moves this week will still remain key to market direction,” said Nicholas Teo, a strategist at KGI Fraser Securities Pte in Singapore. BOJ Governor Haruhiko Kuroda’s “show is especially important. Seeing how much expectations have been building in the markets for a generous helping of stimulus, disappointment in the actual announcement may have a pronounced negative effect,” he said.

The Topix advanced for the first time in four days and the yen weakened 1.1 percent. The package by the government today will include 13 trillion yen in low-interest loans, FNN reported earlier. It must be presented to the parliament, where approval is a formality because the ruling coalition has a majority in both houses.

Taiwan’s Taiex index gained 0.4 percent to a one-year high, South Korea’s Kospi index slipped 0.1 percent and Singapore’s Straits Times Index added 0.2 percent. Hong Kong’s Hang Seng Index increased 0.4 percent. Australia’s S&P/ASX 200 Index closed little changed, while New Zealand’s S&P/NZX 50 Index fell 0.1 percent. In Vietnam, the stock gauge advanced 1.2 percent.

Shanghai Sinks

The Shanghai Composite tumbled 1.9 percent, its first drop in three days. China’s banking regulator is considering tightening curbs on the nation’s $3.6 trillion market for WMPs, the 21st Century Business Herald reported, citing people it didn’t identify. Authorities may set a limit on how much WMPs can invest in equities and “non-standard assets” such as loans, according to the report.

Indonesia’s Jakarta Composite Index climbed 1.2 percent, heading for its highest close since May 2015, after President Joko Widodo picked Sri Mulyani Indrawati as his new finance minister. This is the second cabinet reshuffle since the president, also known as Jokowi, took office less than two years ago, signaling his commitment to push through an ambitious infrastructure program to transform Southeast Asia’s largest economy, and meet a pledge of boosting growth to 7 percent.

Minebea Co. surged 14 percent in Tokyo, pacing gains among Apple Inc.’s suppliers after the iPhone maker forecast fourth-quarter sales that may exceed analysts’ estimates. Shin-Etsu Chemical Co., jumped 15 percent as Macquarie Group Ltd. and Morgan Stanley MUFG Securities Co. upgraded their ratings after the company posted profit that surpassed expectations. PT Telekomunikasi Indonesia rose to a record in Jakarta after the phone operator posted higher first-half profit.

Futures on the S&P 500 Index rose 0.2 percent. The U.S. equity benchmark index closed little changed on Tuesday as earnings from McDonald’s Corp. to Caterpillar Inc. tugged U.S. stocks in opposite directions and as investors turned attention to Wednesday’s Fed decision. Apple climbed in after-hours trading on better-than-expected earnings and iPhone sales.

— With assistance by Emma O'Brien, and Adam Haigh

    Before it's here, it's on the Bloomberg Terminal.