SEOUL, Sept 22 — Asian stocks rallied for a sixth day, South Korea’s won strengthened and regional bonds rose after central banks including the Federal Reserve signaled monetary policies will remain accommodative.
Raw-materials producers were the biggest gainers on an MSCI index of Asian shares outside of Japan, where markets are shut for a holiday. The S&P 500 Index advanced yesterday as the Fed left rates unchanged and scaled back its projections for hikes in 2017 and beyond. The won jumped the most since June as the dollar held losses from the last session. New Zealand’s currency weakened and its 10-year bonds surged by the most since June after its central bank said further policy easing will be needed. Crude oil gained following an unexpected slide in US stockpiles.
Loose monetary policies in the US, Europe and Asia have helped power gains in stocks, bonds and commodities this year and the latest signals from central bankers suggest the era of cheap money has further to run. While the Fed still sees a rate hike this year, its projection for increases next year was trimmed to two from three. Japan’s central bank yesterday pledged to overshoot its 2 per cent inflation goal and took steps to limit the negative side effects of its record stimulus. Indonesia’s central bank is forecast to lower interest rates today, and some economists see scope for a cut in Norway as well.
The period “of having very low developed market rates for a very long time, and investors needing yields, that is still there,” Peter Kinsella, head of emerging market economic and foreign-exchange research at Commerzbank AG, told Bloomberg TV in Hong Kong. “We had previously thought it was going to be an aggressive Fed rate hiking cycle and it’s clearly not going to be that.”
The MSCI Asia Pacific excluding Japan Index was up 1.3 per cent as of 10.20am Hong Kong time. The city’s Hang Seng Index climbed 1.4 per cent and the Hang Seng China Enterprises Index rallied 2.1 per cent, the region’s biggest gains.
Futures on the S&P 500 Index declined 0.1 per cent after the underlying gauge climbed 1.1 per cent in the last session. Contracts on the FTSE 100 Index added 0.3 per cent.
Bloomberg’s dollar gauge, which tracks the greenback against 10 major peers, was little changed after sliding 0.7 per cent in the last session. The won jumped 1.5 per cent and the yen weakened 0.1 per cent, after volatile trading yesterday that saw swings of more than 1 per cent in both directions following the BOJ meeting.
The Japanese central bank’s policy tweaks give it scope to keep easing to revive the economy and inflation, while limiting the negative impact on bank earnings.
The ringgit strengthened 0.5 per cent, the most in two weeks, as the pickup in oil prices brightened prospects for Malaysia, Asia’s only major net exporter of crude.
New Zealand’s 10-year bonds climbed 1 per cent, pushing their yield down by 11 basis points to 2.50 per cent. The Reserve Bank of New Zealand kept its key interest rate at a record low today and said further reductions will be needed in order to move inflation toward its 2 per cent target. Investors increased bets on a November rate cut, with the probability of a move by then rising by 18 percentage points to 69 per cent in the swaps market.
“The RBNZ Statement, although little changed from August, was slightly more dovish than the market anticipated,” said Jason Wong, a currency strategist in Wellington at Bank of New Zealand Ltd. .
Ten-year bond yields in Australia and South Korea dropped by seven basis points to 2.06 per cent and 1.53 per cent, respectively. The rate on similar-maturity US Treasuries fell four basis points yesterday to 1.65 per cent.
Crude oil for delivery in November rose 1 per cent to US$45.79 (RM190) a barrel in New York, after rallying 2.9 per cent in the last session. US inventories fell by 6.2 million barrels last week, official data showed yesterday, spurring optimism a glut will ease. OPEC members Saudi Arabia and Iran, whose rivalry derailed an oil supply accord earlier this year, held talks in Vienna a week before the organization and Russia meet September 28 in Algeria to discuss measures to stabilise prices.
Nickel climbed 1.7 per cent in London, leading gains among industrial metals. Aluminum and zinc rose 1 per cent. — Bloomberg