SINGAPORE: Asian stocks rose to a four-month high after the biggest jump in commodities prices since August boosted U.S. equities. The Australian and New Zealand dollars retreated from their strongest levels since June as crude slipped back toward $40 a barrel.
Raw-materials producers led gains on the MSCI Asia Pacific Index following Tuesday’s 2.5 percent surge in the Bloomberg Commodity Index. Silver extended gains after entering a bull market, while iron ore rallied as BHP Billiton Ltd. cut its production forecast. Oil fell as much as 2.2 percent after Kuwait workers said they would end a strike that disrupted output in OPEC’s fourth-largest producer. The yen rose for the first time this week and South Korea’s won climbed to a five-month high.
MSCI’s gauge of Asian equities has risen in all but three sessions this month as data pointed to a stabilization in Chinese growth, U.S. companies reported better-than-expected earnings and the Federal Reserve signaled a slower pace of interest-rate hikes. American builders commenced construction on the fewest homes in five months in March, data showed Tuesday, and traders are pricing in zero chance the Fed will increase borrowing costs are a review next week.
“The Fed will likely delay raising rates amid signs of weakness in the U.S. economy,” said Angus Nicholson, a markets analyst at IG Ltd. in Melbourne. “The weaker dollar is positive for commodities and equities. There’s a real fundamental basis for the rally, particularly in industrial metals, given the stimulus we’re getting out of China.
Johnson & Johnson, Goldman Sachs Group Inc. and UnitedHealth Group Inc. announced first-quarter earnings on Tuesday that exceeded analysts’ projections, while results from International Business Machines Corp. and Intel Corp. disappointed. Of the 60 members of the Standard & Poor’s 500 Index to have reported so far 77 percent have beaten profit estimates, according to data compiled by Bloomberg. Companies including Coca-Cola Co. and American Express Co. are due to release their figures on Wednesday.
The Topix index climbed 0.6 percent as of 12:08 p.m. in Tokyo, set for its highest close this month. Australia’s benchmark advanced 0.3 percent, while Hong Kong’s Hang Seng Index retreated from this year’s high and the Shanghai Composite Index fell to a one-week low. Goldman Sachs Group Inc. raised its 2016 economic growth forecast for China to 6.6 percent from 6.4 percent.
Futures on the S&P 500 Index fell 0.2 percent, after the benchmark closed above 2,100 for the first time since since Dec. 1.
The yen rose 0.1 percent to 109.07 per dollar, after retreating from a 17-month high of 107.63 reached last week. Japanese exports dropped 6.8 percent from a year earlier in March, while imports declined 14.9 percent, data showed Wednesday. The euro gained 0.1 percent, advancing for a fourth day amid expectations European Central Bank President Mario Draghi will refrain from further monetary easing at a review on Thursday.
The currencies of commodity-exporting nations New Zealand and Australia declined for the first time in four days or more. The kiwi weakened 0.3 percent to 70.23 U.S. cents after breaching the 70-cent mark on Tuesday for the first time since June. The Aussie declined 0.2 percent to 77.97 U.S. cents, after climbing as high as 78.26 in the previous session.
The won strengthened as much as 0.7 percent to 1,128.43 per dollar, the strongest level since Nov. 4. Malaysia’s ringgit rose to a one-week high.
Crude oil slipped 2.3 percent to $40.13 a barrel in New York, having gained 3.3 percent on Tuesday amid a three-day labor strike that reduced Kuwait’s output by as much as 1.7 million barrels a day.
“The size of the disruption, had the strike persisted, would have been quite significant,” Ric Spooner, a chief market analyst at CMC Markets in Sydney, said by phone. “It took quite a lot of oil out of production.”
Silver climbed 1.2 percent, headed for its highest close in almost 11 months. The metal’s 24 percent return this year is the highest of any in the Bloomberg Commodity Index and money managers last week increased their net-long positions by 30 percent to a record.
Iron ore futures traded on the Dalian Commodity Exchange climbed as much as 4.8 percent to the highest level since June 2015. BHP Billiton, the world’s biggest mining company, cut its iron ore production forecast for its Australian mines by 4 percent because of bad weather and rail network maintenance, adding to bullish signals for the global market. Rio de Janeiro-based Vale SA, the largest iron-ore miner, is expected to report record output for the first quarter on Wednesday.
The yield on 10-year U.S. Treasuries fell two basis points to 1.77 percent. The rate may drop to a never-before-seen 1.25 percent in 2016 as investors seek alternatives to lower-yielding securities elsewhere in the world, according to Robert Tipp, the head of global bonds and foreign exchange for the fixed-income division of Prudential Financial Inc., the second-largest U.S. life insurer.
Japan’s 40-year yield fell to a record low on Wednesday, meaning all the nation’s sovereign notes yield less than 0.4 percent amid speculation of additional monetary easing. The yield on the 1.4 percent government note maturing in March 2055 dropped as much as 10 1/2 basis points to 0.31 percent.
The cost of insuring corporate bonds fell in Japan and Australia, according to traders of credit-default swaps. The Markit iTraxx Japan index is on course for its lowest close since December, while THE Markit iTraxx Australia index is headed for a one-month low, according to CMA data.
