Inside Financial Markets

Asian Stocks Rise as Bernanke Signals Stimulus, BOJ Keeps Stance

asian markets1Asian Stocks Rise as Bernanke Signals Stimulus, BOJ Keeps Stance

Asian stocks rose, with the regional benchmark index on course for the highest close in a month, after Federal Reserve Chairman Ben S. Bernanke said the U.S. will continue to need stimulus and the Bank of Japan maintained its policy stance.

BHP Billiton Ltd., the largest global mining company, advanced 2.3 percent in Sydney as raw-material stocks posted the biggest advance on the benchmark gauge. Newcrest Mining Ltd., Australia’s No. 1 gold miner, soared 11 percent as bullion prices climbed a fourth day. ABC-Mart Inc. gained 2.4 percent in Tokyo after the shoe retailer reported a 21 percent jump in first-quarter sales.

The MSCI Asia Pacific Index rose 1.7 percent to 134.65 as of 11:51 a.m. in Hong Kong, extending a recovery from a six-month low on June 25 to 7.7 percent. All 10 industry groups on the gauge climbed, with more than two shares rising for each that fell. A close at this level would be the highest since June 4.

“Economic growth in the U.S. will continue to improve and the Fed won’t start tapering until the end of the year,” Daphne Roth, Singapore-based head of Asia equity research at ABN Amro Private Bank, which oversees about $207 billion, said by telephone. “The Bank of Japan will continue with monetary policy, fiscal policy and, with support in the upper house, hopefully growth strategies as well. We are quite positive on equities.”

Bernanke, who sparked a stock and bond rout in May after signaling the Fed’s asset-buying program could be tapered, said yesterday after a speech in Cambridge, Massachusetts, that “highly accommodative” monetary policy will be needed for the “foreseeable future.”

Fed Minutes

Minutes of the Fed’s June meeting showed that while “several members judged that a reduction in asset purchases would likely soon be warranted,” many want to see further improvement in the labor market before reducing the central bank’s $85 billion-a-month quantitative easing program.

Japan’s Topix index declined 0.8 percent. Hong Kong’s Hang Seng Index climbed 2.2 percent, with volume 35 percent above the 30-day average for the time of day. China’s Shanghai Composite rose 2.2 percent. Australia’s S&P/ASX 200 Index rose 1 percent as a report showed employers unexpectedly hired extra workers in June. New Zealand’s NZX 50 Index added 0.1 percent.

South Korea’s Kospi index increased 2.3 percent as the Bank of Korea held its key interest rate unchanged for a second straight month as it gauges the effect of a May cut in boosting growth. Singapore’s Straits Times Index rose 1.4 percent and Taiwan’s Taiex Index jumped 2 percent.

U.S. Futures

Futures on the Standard & Poor’s 500 Index added 1 percent. U.S. stocks yesterday closed little changed as investors analyzed minutes from the Fed’s last meeting for signs on when the central bank might slow the pace of stimulus efforts. Bernanke spoke after the close of U.S. equity markets.

The MSCI Asia Pacific index fell 8.2 percent through yesterday from a five-year high on May 20 amid concern the Fed will begin tapering stimulus as China’s economy slows and Japan puts off unveiling economic reform policies until after upper house elections later this month.

That left the gauge trading at 13 times average estimated earnings compared with 15 for the Standard & Poor’s 500 Index and 13.1 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

BOJ Meeting

The Bank of Japan raised its assessment of the economy, referring to a recovery for the first time since before a record 2011 earthquake. The central bank stuck with an April pledge to expand the monetary base by 60 to 70 trillion yen ($709 billion) per year.

Thirteen of 20 economists in a Bloomberg News survey completed July 8 predicted no extra BOJ monetary loosening in the next six months amid signs the recovering economy may spur inflation. That was a reversal from a poll in May.

Gauges of energy and raw-material shares posted the largest advance on the MSCI Asia Pacific index. BHP Billiton rose 2.3 percent to A$32.565, Rio Tinto Group gained 2.8 percent to A$53.845 and Newcrest soared 11 percent to A$11.02 in Sydney. Jiangxi Copper Co., China’s biggest producer of the metal, advanced 7.3 percent to HK$12.92 in Hong Kong.

ABC-Mart advanced 2.4 percent to 4,330 yen in Tokyo after reporting a 15 percent increase in profit in the first quarter.


Sanie Khan

Sanie Khan holds a deep knowledge of the financial markets in Pakistan. Based in Karachi, he has over 20 years of hands-on management experience in financial technologies and managing operations in the financial sector. He was the General Manager at the Pakistan Stock Exchange (PSX) for 17 years. He along-with senior members of Exchange

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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)