TOKYO: Asian stocks rose as the weaker yen boosted Japanese exporters and commodity shares rallied after Federal Reserve Chair Janet Yellen signaled the U.S. economy is strengthening enough to withstand gradual increases in borrowing costs.
The MSCI Asia Pacific Index climbed for a third day to extend a five-week high, advancing 0.4 percent to 130.45 as of 9:16 a.m. in Tokyo. The dollar rose the most in three weeks against the yen as Yellen said the positives in the U.S. economy outweigh the negatives, and reaffirmed an outlook of gradual interest-rate increases.
“The normalization program from the Fed is going to be somewhat more gradual than anticipated,” Ric Spooner, chief analyst at CMC Markets in Sydney, said by phone. “It seems likely that we will get at most one rate hike this year and that’s positive for equities and commodities. Of the beaten-down commodities, the oil market is the best place. We’re already seeing supply cutbacks.”
Shares in the U.S. on Monday rose to the highest in seven months and within 1 percent of an all-time high as investor anxiety about the strength of the U.S. economy eased following Yellen’s speech, which also omitted any reference of when the Fed may look to raise interest rates. Futures traders lowered the possibility of a hike by July to 21 percent after her speech from 27 percent. Chances of a hike in September rose slightly to 42 percent.
Investors are turning their focus to central banks, with policy decisions scheduled from the Fed and the Bank of Japan next week. Central banks in Australia and India are due to announce monetary policy decisions Tuesday, while Taiwan and the Philippines release inflation data.
Raw-material and energy shares climbed the most on Tuesday. The four-year bear market that pushed commodities to the lowest level in a quarter century came to end as supply constraints drive a recovery in everything from soybeans to zinc. The Bloomberg commodity gauge, which measures returns on raw materials rose 1.1 percent Monday to push its rally from a January low past 20 percent to meet the definition of a bull market.
Japan’s Topix index rose 0.4 percent after the yen slipped 1 percent against the dollar on Monday. Australia’s S&P/ASX 200 Index added 0.3 percent. South Korea’s Kospi Index climbed 0.7 percent, while New Zealand’s S&P/NZX 50 Index was little changed as both markets reopen following yesterday’s holiday.
Futures in China and Hong Kong point to a higher open, with the FTSE China A50 Index rising 0.4 percent in their most recent trading, while those on the Hang Seng Index climbed 0.8 percent.
Chinese stocks fell on Monday for the first time in three days, led by brokerages and consumer-staples companies, before the release of data this week that will likely show the world’s second-biggest economy failing to sustain growth momentum. The Shanghai Composite Index slid 0.2 percent at the close.
Futures on the S&P 500 Index were unchanged. The U.S. equity benchmark index gained 0.5 percent on Monday to close at a seven-month high.
