Asian Stocks Advance on China GDP, U.S. Rate-Increase Outlook

Updated on
  • Fed seen boosting U.S. rates in December, then taking it easy
  • Philippine shares post steepest two-day gain since May

Are China's Risks Now Back in Focus?

Asian stocks rose for a second day after data out of China showed Asia’s largest economy remained stable in the third quarter and speculation grew the Federal Reserve will stick to a gradual tightening of monetary policy.

The MSCI Asia Pacific Index added 0.3 percent to 139.82 as of 4:10 p.m. in Hong Kong, trimming a gain of as much as 0.4 percent after the Chinese figures were broadly in line with expectations. Asian shares were already higher ahead of the much-anticipated Chinese numbers after a gauge of global equities jumped the most in almost four weeks on Tuesday amid mounting speculation that the Federal Reserve will boost interest rates in December then not rush further increases as the U.S. economy remains mixed.

“China’s economy is showing further signs of stabilizing,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney. “Growth rates are at steady levels and is exactly in line with the state of policies to maintain growth between 6.5 percent to 7 percent.”

Japan’s Topix index finished less than 0.1 percent higher after swinging between gains and losses more than 10 times throughout the day as investors looked ahead to domestic corporate earnings reports while continuing to gauge the likelihood of a Fed interest rate increase this year and its impact on the yen.

Services industries paced the expansion in China in the first three quarters, with the sector growing 7.6 percent. Industrial output increased 6.1 percent from a year earlier in September, compared with analysts’ median projection for a 6.4 percent rise. Chinese consumers continued to prop up the economy, with retail sales rising 10.7 percent last month from a year earlier, matching economists’ median forecast.

Australian Betting

South Korea’s Kospi index added less than 0.1 percent, New Zealand’s S&P/NZX 50 Index rose 0.1 percent after tumbling to a three-month low on Tuesday, while Australia’s S&P/ASX 200 Index closed up 0.4 percent.

Equity benchmark gauges in Taiwan and Thailand gained at least 0.6 percent, while Vietnam gained 1 percent and Singapore increased 0.1 percent. Indian and Indonesian stocks declined at least 0.3 percent Hong Kong’s Hang Seng Index lost 0.4 percent, while the Shanghai Composite Index closed little changed, after advancing 1.4 percent on Tuesday.

Tatts Group Ltd. soared 16 percent in Sydney, the most in more than 11 years and the biggest gain on the MSCI Asia Pacific Index. Tabcorp Holdings Ltd., which agreed to buy Tatts to create a pan-Australian betting company to take on online rivals, gained 3.5 percent.

Philippine Rally

The Philippine Stock Exchange Index jumped 2 percent, capping its biggest two-day rally since May, amid optimism that President Rodrigo Duterte’s four-day visit to China will improve relations and yield a slew of business deals. SM Prime Holdings Inc., which is planning to open its biggest shopping mall in China this year, rallied 3.6 percent.

“Traders are looking at a positive outcome from this trip to China,” said Andrew Inovero, assistant vice president at Malayan Bank in Manila. “It’s opening new doors for more investments and that’s providing a catalyst for the market rally that hopefully will continue for the rest for the week or farther.”

Sharp Corp. jumped 11 percent, the second-biggest gain on the Asia gauge, after the company said it anticipates full-year operating profit and net income to improve “improve drastically” due to efforts to restore profitability and synergies after its merger with Foxconn Technology Group in August.

Fed Odds

Futures on the S&P 500 Index fell 0.2 percent. The U.S. equity benchmark index climbed 0.6 percent on Tuesday amid corporate earnings results and speculation that the economy is strong enough to cope with the gradual pace of monetary tightening indicated by policy makers.

Odds on the Federal Reserve raising interest rates by the end of the year are down about five percentage points from where they were a week ago. While the cost of living rose at the fastest pace in five months in September, the increase in prices excluding volatile food and fuel costs trailed estimates, data Tuesday showed. A separate report showed confidence among homebuilders cooled in October from an 11-month high, reflecting a pause in the market for single-family houses.

“The global economy can withstand gradual rate rises from the Fed,” McCarthy at CMC said. “Overall, growth is much lower than it used to be, but the global economy is still growing.”

West Texas Intermediate crude gained 1 percent, heading for its second day of advance, as industry data was said to show American stockpiles dropped last week.