Asian Stocks Climb as Won to Aussie Jump; Copper Retreats

Asian Stocks Climb as Won to Aussie Jump; Copper Retreats

Asia’s benchmark stock index headed for the highest close in five years and emerging-market currencies rose on bets the U.S. Federal Reserve will hold off cutting stimulus until next year. Australia’s dollar jumped after inflation data.

The MSCI Asia Pacific Index added 0.5 percent by 11 a.m. in Tokyo, on course for the highest close since June 2008. Standard & Poor’s 500 Index (SPA) futures lost 0.1 percent. South Korea’s won climbed to the strongest level since January, Malaysia’s ringgit gained 0.7 percent and Australia’s dollar advanced to a four-month high. Copper fell 0.4 percent while silver rose a seventh day. Treasury 10-year note yields touched a three-month low, and bond risk in Asia declined.

Barclays Plc joined ING Bank NV in calling for a delay in Fed tapering as data showed U.S. employers added fewer workers than projected. Inflation in Australia quickened more than expected last quarter while a report today is forecast to show consumer confidence in the euro area climbed to the highest since July 2011.

“The U.S. economy is in no shape to withstand a reduction in monetary stimulus,” said Matthew Sherwood, the head of investment markets research in Sydney at Perpetual Investments, which manages about $25 billion. “Expectations of tapering delays will continue to support markets.”

Japan’s Topix Index (TPX) pared gains of as much as 0.7 percent to rise 0.3 percent, heading for the highest close since Sept. 27. Australia’s S&P/ASX 200 Index (AS51) added 0.3 percent, climbing a seventh day and extending its advance from a five-year high.

Treasury Holdings

Hong Kong’s Hang Seng Index gained 0.7 percent, while the Shanghai Stock Exchange Composite Index climbed 0.6 percent. Shares in Malaysia, the Philippines, Indonesia, Singapore and New Zealand also advanced. Markets in Thailand are shut today.

China, the largest foreign lender to the U.S., cut its holdings of Treasury notes by $11.2 billion, or 0.9 percent, in August to $1.268 trillion, the least since February. China’s position has retreated by $29.2 billion since peaking this year at $1.297 trillion in May as yields climbed.

Ten-year Treasury yields touched 2.5 percent, the lowest since July 23, Bloomberg Bond Trader data showed. Treasuries rallied the most in a month yesterday after a report delayed because of the U.S. government shutdown showed employers added 148,000 workers in September, below the 180,000 gain projected in a Bloomberg survey. Japan’s 10-year yield declined one basis point to 0.605 percent, the lowest level since May 9.

Bond Risk

The cost of insuring corporate and sovereign bonds in the Asia-Pacific region against non-payment fell. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan dropped 3 basis points to 132 basis points, Australia New Zealand Banking Group Ltd. prices show. The gauge is set to decline 24.4 basis points from Sept. 30, according to data provider CMA.

The won appreciated a second day, gaining 0.5 percent to 1,055.75 per dollar, the strongest level since Jan. 11. The ringgit rose to 3.151 a dollar, snapping a three-day drop. Thailand’s baht and the Philippine peso also advanced.

Australia’s dollar jumped 0.4 percent to 97.43 U.S. cents, the strongest level since June 3. Consumer prices in Australia rose 1.2 percent in the third quarter from the previous three months, when they gained 0.4 percent, the government statistician said. Analysts projected a 0.8 percent increase.

The euro was little changed at $1.3785 after reaching the strongest closing price since November 2011 yesterday, when it gained 0.7 percent. The Bloomberg U.S. Dollar Index, which measures the greenback against 10 major peers, fell 0.1 percent after sinking 0.5 percent yesterday to snap a two-day gain.

Tapering Outlook

The Fed will probably delay the first reductions in its quantitative-easing program until March, according to a survey of economists conducted Oct. 17-18.

Policy makers unexpectedly refrained in September from reducing the $85 billion-a-month in bond purchases, saying they wanted more evidence of an economic recovery. Deutsche Bank AG sees quantitative easing continuing into the first quarter of next year, while Goldman Sachs Group Inc. economists said that while tapering in December “remains a possibility,” March is the most likely date.

Partially closing the government during the U.S. fiscal impasse trimmed 0.25 percentage point from economic growth in the fourth quarter and cost the world’s biggest economy 120,000 jobs this month, Jason Furman, head of President Barack Obama’s Council of Economic Advisers, said at a briefing yesterday.

S&P Rally

The S&P 500 rose a fifth day yesterday, gaining 0.6 percent to reach a record high for a fourth straight day. The gauge extended its 2013 advance to 23 percent, on pace to challenge 2009’s 23.45 percent jump for its best yearly rally in a decade.

The rally has been fueled by unprecedented Fed stimulus and better-than-estimated corporate earnings. Analysts raised forecasts for profits in the third quarter, predicting an average increase of 2.5 percent for all companies in the gauge, estimates compiled by Bloomberg show. That compares with 1.7 percent forecast at the beginning of the month.

Earnings beat analyst estimates at 74 percent of the 141 companies in the S&P 500 (SPX) that have released their results so far this reporting period, while 53 percent exceeded sales projections, data compiled by Bloomberg show. Eli Lilly & Co., General Dynamics Corp. and Caterpillar Inc. (CAT) are among S&P 500 members scheduled to report today.

Copper, Oil

Copper for three-month delivery on the London Metal Exchange dropped to $7,300 a metric ton after rallying 1.2 percent yesterday. Aluminum retreated 0.2 percent after rising the past two days. Silver gained 0.3 percent to $22.7733 an ounce, set for the longest rally since August.

West Texas Intermediate oil fell 0.2 percent to $98.13 a barrel after sliding almost 3 percent the past two days. Brent futures were little changed at $109.92 today. WTI’s discount to Brent crude widened to the most since April.

Analysts surveyed by Bloomberg are predicting the Energy Information Administration will say today that U.S. crude inventories rose a fifth week. Stockpiles rose by a more-than-expected 4 million barrels in the week to Oct. 11, a delayed report showed Oct. 21.