Asian Stocks Rise to Two-Week High as Investors Await Earnings

  • Shanghai Composite Index advances to highest since January
  • Over 350 companies on Japan’s Topix report earnings this week

Asian stocks climbed as Shanghai equities rallied to a nine-month high and investors braced for a busy week of earnings across Japan, China and the U.S.

The MSCI Asia Pacific Index rose 0.4 percent to 140.27 as of 4:10 p.m. in Hong Kong, set for a two-week high. The measure capped its best week in a month last week as data showed Chinese economic growth is stabilizing while investors weighed the outlook for higher U.S. borrowing costs. More than 350 companies on Japan’s Topix index will give quarterly updates this week. In Hong Kong, reports include those from Industrial & Commercial Bank of China Ltd. at the end of the week.

“Earnings is the key metric for investors,” said Matthew Sherwood, head of investment strategy in Sydney at Perpetual Ltd., which manages about $21 billion. “Meanwhile, there are a number of important macro events which are holding the market back, including the U.S. election early next month and key Fed and ECB meetings in December.”

The Asian gauge has failed to break above its most recent high on Sept. 22 as uncertainties including the U.S. presidential election on Nov. 8 and the trajectory for stimulus from the Federal Reserve and the European Central Bank weigh on investors’ minds. The measure now trades at 14.5 times projected earnings, compared with its three-year average multiple of 13.6.

San Francisco Fed President John Williams is the most recent official to comment, saying that slow growth is probably “here to stay” and repeating his support for a gradual increase in rates “sooner rather that later.” The odds the Fed will act by December climbed to 68 percent last week.

Beijing Plenum

The Shanghai Composite Index climbed 1.2 percent to the highest close since Jan 8 amid optimism that the government will boost infrastructure spending and speed up an overhaul of state-owned companies. The Hang Seng China Enterprises Index of mainland companies traded in Hong Kong gained 1.7 percent.

China’s leaders gather for their annual plenum in Beijing this week, pivotal to President Xi Jinping’s efforts to consolidate power. Topping the agenda is institutionalizing his unprecedented anti-corruption campaign.

Japan Exports

The Topix added 0.2 percent, wiping our earlier losses as much as 0.3 percent. Trading volume was subdued, with the lowest value of shares changing hands since May. Japan’s exports fell for a 12th consecutive month in September, data on Monday showed, rounding out a year’s worth of poor returns for an economy struggling with a resurgent yen and weak global demand.

Hong Kong’s Hang Seng Index climbed 1 percent as trading resumed in the city after a typhoon shut financial markets on Friday. South Korea’s Kospi index added 0.7 percent and Australia’s S&P/ASX 200 Index slipped 0.4 percent. Markets in New Zealand and Thailand are closed for holidays.

Taiwan’s Taiex index rose 0.2 percent, while stocks in India and Singapore added at least 0.6 percent. Equity gauges in Indonesia and Malaysia climbed at least 0.3 percent. The Philippine Stock Exchange Index fell for a third day, losing 0.5 percent.

China Coal Energy Co. surged 6.7 percent in Hong Kong, pacing a rally among China’s coal producers amid speculation prices of the fuel will remain elevated. Astellas Pharma Inc. jumped 3.5 percent in Tokyo after the Nikkei newspaper said the drugmaker’s first half operating profit increased 20 percent from a year ago. Coca-Cola Amatil Ltd, slumped 6.4 percent after the softdrink maker warned of the rising cost of sugar and electricity.

Futures on the S&P 500 Index rose 0.5 percent. The U.S. equity benchmark index closed little changed on Friday after erasing an early selloff, as deal activity boosted consumer stocks and Microsoft Corp. rallied to a record, offsetting losses spurred by concerns a stronger dollar will damp corporate earnings. Key earnings due this week in the U.S. include Apple Inc. and Caterpillar Inc.

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