BL: Asia Stocks Rise on Improving Economic Outlook; Pound Drops for Sixth Day
By Linus Chua and Weiyi Lim
March 2 (Bloomberg) -- Asian stocks rose to the highest in five weeks as gains in U.S. consumer spending, South Korean exports and lower unemployment in Japan signal faster economic growth. The Australian dollar traded near a one-week high.
The MSCI Asia Pacific Index added 0.3 percent to 119.33 as of 1:25 p.m. in Tokyo, the highest since Jan. 26, and the cost of protecting bonds in the region from default fell. The so- called Aussie climbed after the central bank raised interest rates. The pound dropped for a sixth day versus the dollar, and futures on the Standard & Poor’s 500 Index declined 0.1 percent.
U.S. consumer spending and South Korean exports increased for a fourth straight month, while Japan’s unemployment rate unexpectedly slid in January, one of the first signs that a rebound in overseas shipments is benefitting workers. The data lifted investor optimism for stable economic growth.
“We are expecting global recovery to come through, and this should be a reasonable backdrop for stocks,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors, which oversees $90 billion. “Economic indicators have been consistent, showing a gradual recovery.”
South Korea’s Kospi Index climbed 1.1 percent. Taiwan’s Taiex rose 0.5 percent. New Zealand’s NZX 50 Index advanced 0.6 percent.
Hon Hai Precision Industry Co., an Apple Inc. supplier, climbed 2.3 percent in Taipei. Li & Fung Ltd., a Hong Kong trading company that sells goods to Wal-Mart Stores Inc. and Target Corp., rose 2.6 percent.
Technology Stocks
Technology companies gained the most among the 10 industry groups in the MSCI Asia Pacific Index. South Korea’s Samsung Electronics Co., the world’s biggest maker of computer memory chips, climbed 3.2 percent in Seoul. Toshiba Corp., Japan’s biggest memory-chip maker, rose 1.6 percent in Tokyo. Taiwan Semiconductor Manufacturing Co., the world’s biggest maker of customized chips, gained 0.5 percent.
Hong Kong’s Hang Seng Index lost 0.7 percent, led by HSBC Holdings Plc, which slumped 6.4 percent to HK$80.85 after the bank reported lower-than-estimated profit.
Australia’s S&P/ASX 200 Index pared gains of as much as 0.6 percent, rising 0.1 percent after the rate increase. The Australian dollar briefly climbed to 90.31 U.S. cents, its strongest since Feb. 23, after the decision which was forecast by 14 of 19 economists in a Bloomberg survey. The currency was little changed, trading 89.89 cents.
Bond Risk Falls
The cost of protecting bonds in the Asia-Pacific region from default fell. The Markit iTraxx Australia index dropped 2 basis points to 89.5, according to Citigroup Inc. The Markit iTraxx Japan index lost 2 basis points to 140, Morgan Stanley prices show. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan fell 1.5 basis points to 109 basis points, according to Citigroup Inc. Credit-default swap indexes are benchmarks for protecting bonds against default, and a drop shows improving perceptions of credit quality.
“The market is becoming comfortable that the U.S. recovery is in place,” said Tim Schroeders, who helps manage about $1.1 billion at Pengana Capital Ltd. in Melbourne. “There is still a pervading caution given the volatility in markets.”
The pound dropped after polls showed Britain may have its first minority government since 1974 and ahead of a report forecast to show that a recovery in consumer confidence stalled in February. The pound was at $1.4941 in Tokyo from $1.4991 in New York yesterday when it dropped to $1.4784, the lowest level since May 1. It was at 90.56 pence per euro from 90.47 pence yesterday after reaching 91.50, the weakest since Dec. 1.
Copper Dips
Copper for three-month delivery dropped 0.2 percent to $7,385 a metric ton as Codelco and Anglo American Plc ramped up output in Chile after power was restored following the Feb. 27 earthquake. Codelco, the world’s largest copper producer, said it will be able to make up for “minor” production losses at its mines later this year.
Oil traded below $80 a barrel in New York as the dollar gained, before a report that is expected to show U.S. crude supplies increased for a fifth week, signaling demand from the world’s biggest energy consumer may be slowing.
Oil was trading at $78.79 a barrel after dropping 1.2 percent yesterday as the dollar advanced against the euro, making investments in dollar-denominated commodities less attractive. Crude inventories in the U.S. probably rose 0.5 percent last week, according to a Bloomberg News survey before an Energy Department report this week.
To contact the reporters for this story: Linus Chua at lchua@bloomberg.net; Weiyi Lim in Taipei at wlim26@bloomberg.net
Last Updated: March 1, 2010 23:27 EST
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