BackAsian stocks extend post-BoJ gain as China slowdown hurts aussie
The Australian dollar declined after an official Chinese manufacturing gauge missed economists' estimates
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Wellington: Asian stocks climbed and Japanese bond yields tumbled as the impact of the Bank of Japan’s surprise stimulus move continued to be felt across financial markets. The Australian dollar declined after an official Chinese manufacturing gauge missed economists’ estimates.
Japan’s Topix index headed for an almost one-month high, after the BoJ’s unexpected policy easing Friday saw global equities claw back some gains amid their worst month since last August’s rout. Yields on Japan’s 10- and 20-year bonds slid to records, while the yen was on track for its longest slump versus the euro since 2013. Weaker-than-expected trade data hit the Korean won, while the Australian and New Zealand dollars fell with copper. Oil halted its four-day rebound.
Policy makers took the sting out of the weakest start to a year since 2009 for global equities, helping in the second half of the month to ease a selloff that erased more than $5 trillion in market value. The European Central Bank’s indication that it could expand stimulus in March was followed by the Federal Reserve standing pat on interest rates amid concern over the market turmoil. The BoJ outdid them both, shocking investors Friday by following the ECB in imposing negative rates in a bid to revive lending.
“With lower global growth and inflation expected, the BoJ has taken a leap forward, and Europe is considering a move as well," said Shoji Hirakawa, chief equity strategist at Okasan Securities Co. in Tokyo. “Investors such as pension funds should slowly shift their assets from bonds to equities."
The focus Monday shifts to global factory output, with manufacturing purchasing managers’ indexes for India to the euro area due. China’s official factory PMI dropped to 49.4 for January, below the 49.6 level projected by economists. Readings below 50 indicate contraction in the sector. China was the epicenter of market turmoil in the first two weeks of January as regulators struggled to come to grips with a renewed equity rout. Thailand and Indonesia update on consumer prices Monday. Malaysian markets are closed for a holiday.
Stocks
The MSCI Asia Pacific Index added 0.9% as of 10:55 am Tokyo time. In Japan, the Topix gained 1.9% to extend Friday’s 2.9% surge, even as bank losses dragged on the gauge. Financial shares have been falling since the BoJ’s decision, which will see the central bank start charging lenders for some of their deposits held at the institution. Australia’s S&P/ASX 200 Index rose 1.3%, led by health-care stocks and technology shares, while the Kospi index in Seoul advanced 0.3%. Hong Kong’s Hang Seng Index slid 0.2%, weighed down by the manufacturing data, while the Shanghai Composite index lost 0.6%. US index futures were down 0.2%.
Commodities
Oil halted its longest run of gains this year as Kuwait and Nigeria helped boost crude production from Opec, exacerbating a global glut. Futures lost as much as 1.5% in New York after earlier rising as much as 1.7%. Output from the Organization of Petroleum Exporting Countries climbed to 33.11 million barrels a day in January as Iran pumped a further 60,000 barrels a day, according to data compiled by Bloomberg.
Industrial metals slid as China’s official factory gauge indicated weaker demand in the world’s biggest commodity consumer. Zinc fell as much as 1%, while lead lost 1.1%. Copper and aluminum also declined.
Rubber in Tokyo climbed as much as 3.2% as the Japanese currency declined.
Currencies
The yen fell 0.1% against the dollar to 121.34 after slumping as much as 2.3% on Friday to 121.69, its lowest since 18 December.
The won lost 0.5% after South Korea’s exports shrank the most since August 2009 and the yen’s slide worsened the outlook for shipments. The Aussie dollar and the New Zealand dollar both slid 0.3%.
Bonds
Japanese 10-year notes extended their strongest rally in more than a decade, driving the yield down 3 basis points to a record 0.06%. The yield on two-year debt declined to an unprecedented minus 0.1%. Bloomberg
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