Monday, 26 October, 2015
Asian Stocks Extend Global Rally After China Adds to Stimulus
(Bloomberg) — Asian stocks pared gains, while the Australian dollar strengthened after China cut interest rates and lenders’ reserve requirements on Friday. The U.S. dollar slipped against major peers after capping its longest winning streak since January.
The MSCI Asia Pacific Index rose for a second day. The Hang Seng China Enterprises Index erased an early advance, while metals were mixed after the People’s Bank of China’s move helped a gauge of emerging-market shares cap a fourth weekly advance on Friday. The Bloomberg Dollar Spot Index retreated as the Aussie and yen climbed. Poland’s zloty fluctuated after the opposition Law & Justice party was projected to have won a majority of seats in parliamentary elections.
“The ongoing easing program is clearly aimed at supporting growth and as such, is a big positive,” said Shane Oliver, a Sydney-based global strategist at AMP Capital Investors Ltd., which manages $113 billion. “Monetary conditions remain easy.
This in turn should help see the global economic recovery continue.”
China begins its policy-setting plenum Monday, with investors awaiting next year’s official growth targets after the PBOC’s sixth interest-rate cut since November. With analysts predicting further easing from both the European Central Bank and the Bank of Japan, the move underscores policy divergence with the U.S. Traders put the odds of the Federal Reserve raising rates by year-end at more than 30 percent.
China’s one-year lending rate was cut to 4.35 percent from
4.6 percent, the PBOC said on its website on Friday, while the one-year deposit rate will fall to 1.5 percent from 1.75 percent. Reserve requirements for all banks were lowered by 50 basis points, with an extra 50 basis-point reduction for some institutions.
Stocks
The Asia-Pacific equity gauge climbed 0.4 percent by 2:45 p.m. in Tokyo, as MSCI Inc.’s emerging-market measure fluctuated. Australia’s S&P/ASX 200 Index also swung between gains and losses, while Japan’s Topix index advanced 0.8 percent in Tokyo and the Kospi index in Seoul up 0.1 percent.
Hong Kong’s China stock gauge erased a gain to fall 0.2 percent. The Hang Seng China Enterprises Index is close to entering a bull market after advancing 18 percent through Friday from a Sept. 7 low. The Shanghai Composite Index climbed 0.7 percent after rising almost 17 percent through Oct. 23 from its bottom in August.
China’s leaders gathering in Beijing this week to formulate the 13th five-year plan confront an era of sub-7 percent economic growth for the first time since Deng Xiaoping opened the nation to the outside world in the late 1970s. The nation won’t “guard to death” its target for economic expansion, though it will maintain growth within a reasonable range, China News reported, citing Premier Li Keqiang.
Stocks in the Philippines rallied to a 10-week high, with the benchmark gauge surging 1.9 percent in Manila. “China’s rate cut is boosting investor sentiments across markets,” said Nescyn Presinede, a trader at Manila-based Rizal Bank.
Standard & Poor’s 500 Index futures fell Monday after the U.S. gauge jumped 1.1 percent Friday, erasing a loss in 2015 that reached as much as 9.3 percent on Aug. 25. Google parent Alphabet Inc., Amazon.com Inc. and Microsoft Corp. added more than $80 billion in market value after earnings topped estimates.
The MSCI All-Country World Index was little changed Monday after adding 1 percent Friday to cap a fourth weekly gain.
FTSE 100 Index futures slipped 0.2 percent Monday. The Stoxx Europe 600 Index climbed 2 percent to post the biggest two-day gain since July. The gauge added 3.9 percent last week.
Currencies
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, slipped 0.2 percent Monday. The measure rose for a seventh day Friday to the highest level this month.
The dollar is benefiting from policy divergence as central banks outside the U.S. struggle to bolster growth.
The likelihood that the Fed raises rates by the end of the year rose to 36 percent Friday, from 32 percent a week earlier.
China’s policy shift will help curb volatility in its markets, removing an obstacle that kept the Fed from increasing borrowing costs at its last meeting in September, said John Gorman, the head of dollar debt trading for Asia and the Pacific at Nomura Holdings Inc.
The yen added 0.3 percent to 121.06 per dollar Monday.
Japan’s currency fell 0.6 percent, the most since Sept. 2, on Friday to cap its biggest weekly drop since May 29. The Australian dollar, considered a proxy for sentiment on China, climbed 0.6 percent and New Zealand’s currency added 0.4 percent. The euro was 0.2 percent higher.
The yuan was little changed Monday in offshore trading. The PBOC’s moves “will keep the yuan under downward pressure, drive Chinese money-market rates lower, but have a largely muted effect on longer-term bond yields,” Elias Haddad, a Sydney-based currency strategist at Commonwealth Bank of Australia, wrote in a note.
International Monetary Fund representatives have told China that the yuan is likely to join the fund’s basket of reserve currencies soon, according to Chinese officials with knowledge of the matter.
South Korea’s won tumbled 0.8 percent to 1,133.56 per dollar. Sluggish global trade means that the contribution of exports to Korea’s economic growth is low and downside risks to the outlook remain, Yonhap News reported Finance Minister Choi Kyung Hwan said during a visit to Russia.
The zloty swung to a gain of 0.2 percent, erasing a drop of as much as 0.5 percent. Law & Justice, which pledged a tougher stance on refugees and more state control over the economy, won
39.1 percent of the vote and a projected 242 seats in the 460- member lower chamber, the first time that a single group will command a majority since the re-introduction of democracy in Poland in 1989, according to an Ipsos poll.
Commodities
Oil traded near the lowest closing price in almost four weeks as the pace of U.S. drill rig reductions slowed in the world’s biggest crude consumer. West Texas Intermediate crude rose 0.2 percent to $44.70 a barrel, while Brent added 0.2 percent to $48.06 a barrel in London.
Base metals were mixed, with nickel and zinc declining amid speculation that demand will continue to weaken in China. Copper for three month delivery in London swung between gains and losses after the policy moves in the world biggest consumer of raw materials failed to prevent it from sliding 1.1 percent Friday.
Gold for immediate delivery was little changed at $1,165.56 per ounce after a three-day drop. Gold investors are tracking the Fed to see when borrowing costs will start to rise for the first time since 2006, with policy makers beginning a two-day meeting in Washington on Tuesday.
The MSCI Asia Pacific Index rose for a second day. The Hang Seng China Enterprises Index erased an early advance, while metals were mixed after the People’s Bank of China’s move helped a gauge of emerging-market shares cap a fourth weekly advance on Friday. The Bloomberg Dollar Spot Index retreated as the Aussie and yen climbed. Poland’s zloty fluctuated after the opposition Law & Justice party was projected to have won a majority of seats in parliamentary elections.
“The ongoing easing program is clearly aimed at supporting growth and as such, is a big positive,” said Shane Oliver, a Sydney-based global strategist at AMP Capital Investors Ltd., which manages $113 billion. “Monetary conditions remain easy.
This in turn should help see the global economic recovery continue.”
China begins its policy-setting plenum Monday, with investors awaiting next year’s official growth targets after the PBOC’s sixth interest-rate cut since November. With analysts predicting further easing from both the European Central Bank and the Bank of Japan, the move underscores policy divergence with the U.S. Traders put the odds of the Federal Reserve raising rates by year-end at more than 30 percent.
China’s one-year lending rate was cut to 4.35 percent from
4.6 percent, the PBOC said on its website on Friday, while the one-year deposit rate will fall to 1.5 percent from 1.75 percent. Reserve requirements for all banks were lowered by 50 basis points, with an extra 50 basis-point reduction for some institutions.
Stocks
The Asia-Pacific equity gauge climbed 0.4 percent by 2:45 p.m. in Tokyo, as MSCI Inc.’s emerging-market measure fluctuated. Australia’s S&P/ASX 200 Index also swung between gains and losses, while Japan’s Topix index advanced 0.8 percent in Tokyo and the Kospi index in Seoul up 0.1 percent.
Hong Kong’s China stock gauge erased a gain to fall 0.2 percent. The Hang Seng China Enterprises Index is close to entering a bull market after advancing 18 percent through Friday from a Sept. 7 low. The Shanghai Composite Index climbed 0.7 percent after rising almost 17 percent through Oct. 23 from its bottom in August.
China’s leaders gathering in Beijing this week to formulate the 13th five-year plan confront an era of sub-7 percent economic growth for the first time since Deng Xiaoping opened the nation to the outside world in the late 1970s. The nation won’t “guard to death” its target for economic expansion, though it will maintain growth within a reasonable range, China News reported, citing Premier Li Keqiang.
Stocks in the Philippines rallied to a 10-week high, with the benchmark gauge surging 1.9 percent in Manila. “China’s rate cut is boosting investor sentiments across markets,” said Nescyn Presinede, a trader at Manila-based Rizal Bank.
Standard & Poor’s 500 Index futures fell Monday after the U.S. gauge jumped 1.1 percent Friday, erasing a loss in 2015 that reached as much as 9.3 percent on Aug. 25. Google parent Alphabet Inc., Amazon.com Inc. and Microsoft Corp. added more than $80 billion in market value after earnings topped estimates.
The MSCI All-Country World Index was little changed Monday after adding 1 percent Friday to cap a fourth weekly gain.
FTSE 100 Index futures slipped 0.2 percent Monday. The Stoxx Europe 600 Index climbed 2 percent to post the biggest two-day gain since July. The gauge added 3.9 percent last week.
Currencies
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, slipped 0.2 percent Monday. The measure rose for a seventh day Friday to the highest level this month.
The dollar is benefiting from policy divergence as central banks outside the U.S. struggle to bolster growth.
The likelihood that the Fed raises rates by the end of the year rose to 36 percent Friday, from 32 percent a week earlier.
China’s policy shift will help curb volatility in its markets, removing an obstacle that kept the Fed from increasing borrowing costs at its last meeting in September, said John Gorman, the head of dollar debt trading for Asia and the Pacific at Nomura Holdings Inc.
The yen added 0.3 percent to 121.06 per dollar Monday.
Japan’s currency fell 0.6 percent, the most since Sept. 2, on Friday to cap its biggest weekly drop since May 29. The Australian dollar, considered a proxy for sentiment on China, climbed 0.6 percent and New Zealand’s currency added 0.4 percent. The euro was 0.2 percent higher.
The yuan was little changed Monday in offshore trading. The PBOC’s moves “will keep the yuan under downward pressure, drive Chinese money-market rates lower, but have a largely muted effect on longer-term bond yields,” Elias Haddad, a Sydney-based currency strategist at Commonwealth Bank of Australia, wrote in a note.
International Monetary Fund representatives have told China that the yuan is likely to join the fund’s basket of reserve currencies soon, according to Chinese officials with knowledge of the matter.
South Korea’s won tumbled 0.8 percent to 1,133.56 per dollar. Sluggish global trade means that the contribution of exports to Korea’s economic growth is low and downside risks to the outlook remain, Yonhap News reported Finance Minister Choi Kyung Hwan said during a visit to Russia.
The zloty swung to a gain of 0.2 percent, erasing a drop of as much as 0.5 percent. Law & Justice, which pledged a tougher stance on refugees and more state control over the economy, won
39.1 percent of the vote and a projected 242 seats in the 460- member lower chamber, the first time that a single group will command a majority since the re-introduction of democracy in Poland in 1989, according to an Ipsos poll.
Commodities
Oil traded near the lowest closing price in almost four weeks as the pace of U.S. drill rig reductions slowed in the world’s biggest crude consumer. West Texas Intermediate crude rose 0.2 percent to $44.70 a barrel, while Brent added 0.2 percent to $48.06 a barrel in London.
Base metals were mixed, with nickel and zinc declining amid speculation that demand will continue to weaken in China. Copper for three month delivery in London swung between gains and losses after the policy moves in the world biggest consumer of raw materials failed to prevent it from sliding 1.1 percent Friday.
Gold for immediate delivery was little changed at $1,165.56 per ounce after a three-day drop. Gold investors are tracking the Fed to see when borrowing costs will start to rise for the first time since 2006, with policy makers beginning a two-day meeting in Washington on Tuesday.
For Related News and Information:
Top Stories on Stocks: TOP STK
U.S. Stock Greets: TNI USS GREET
Developed Markets View: DMMV
Stock Market Map: IMAP G
World Equity Markets: WEI
–With assistance from Adam Haigh in Sydney.
To contact the reporter on this story:
Nick Gentle in Hong Kong at +852-2977-6545 or ngentle2@bloomberg.net To contact the editors responsible for this story:
Nick Gentle at +852-2977-6545 or
ngentle2@bloomberg.net
John McCluskey, Michael Patterson
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