Asian Stocks Advance as Banks Rally; Dollar Mixed

EghtesadOnline: Asian stocks advanced after the Trump administration’s plan to roll back financial regulations sparked a rally in global bank shares. The dollar was mixed as a U.S. jobs report showed weaker wage growth.

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06 February 2017

Equities from Japan to Hong Kong climbed after the S&P 500 Index closed within a point of its all-time high on Friday. Mitsubishi UFJ Financial Group Inc. jumped to the highest level of the year to pace gains in bank stocks, while Chinese insurers in Hong Kong rallied. The South Korean won extended the biggest weekly advance since July, while the Bloomberg Dollar Spot Index was flat. Oil touched $54 a barrel, after three straight weeks of gains, Bloomberg reported.

The latest U.S. jobs report showed weak wage growth even as hiring picked up, bolstering the Federal Reserve’s case for a gradual approach to tightening. Odds for a Fed rate hike in March are lower than a week earlier, even after San Francisco Fed President John Williams reiterated that three rate hikes this year is a reasonable guess. The data capped a week that saw monetary policy makers in Japan, the U.K. and the U.S. stand pat as they assess the impact of America’s new leadership on global growth.

Global financial shares are rallying for a second day after U.S. President Donald Trump moved to roll back bank regulations enacted to stop the next financial crisis. The group has soared 38 percent from a low a year ago. Banks in Japan are also benefiting from robust earnings, as surging global bond yields and market volatility since Trump’s election victory have been a boon to fixed-income trading.

What’s coming up for the markets:

Central banks will remain in focus this week, with Australia, India, New Zealand, Philippines, Thailand, and Sri Lanka scheduling separate meetings on monetary policy.

The earnings parade continues: Toyota Motor, NTT, SoftBank Group, Rio Tinto, Japan Tobacco, SingTel, Nissan Motor, Fuji Heavy, Daikin Industries, Mitsubishi Estate and Mitsui & Co. are among the companies reporting.

Japan’s Prime Minister Shinzo Abe meets U.S. President Donald Trump at the White House at the end of the week.

Here are the main market moves:

Stocks

The MSCI Asia Pacific Index gained 0.4 percent as of 2:04 p.m. in Tokyo. Japan’s Topix index rose 0.3 percent, paring an advance of as much as 1 percent. The gauge last week had its biggest weekly decline since November.

Mitsubishi UFJ jumped 3.5 percent after third-quarter profit unexpectedly rose 17 percent. Yahoo Japan Corp. soared 14 percent, the most since 2014, after earnings beat estimates on strong growth in advertising and online shopping from smartphones.

Hong Kong’s Hang Seng advanced 0.6 percent, while the Hang Seng China Enterprises Index rose 1.4 percent as insurers surged amid speculation Chinese pension funds are about to enter the stock market.

India’s Sensex added 0.7 percent to the highest since October. Taiwan’s Taiex jumped 0.8 percent to a June 2015 high. New Zealand’s market is closed for a holiday.

The S&P 500 climbed 0.7 percent to 2,297.42 on Friday, within a point of its all-time closing record set Jan. 25.

Currencies

South Korea’s won added 0.9 percent and the Taiwanese dollar advanced 0.4 percent. The currencies have been among the top performers in Asia this year, bolstered by the Trump administration’s rhetoric on exchange-rate manipulation.

The yen climbed 0.1 percent to 112.54 per dollar.

The Bloomberg Dollar Spot Index was little changed, after completing a sixth weekly decline for its longest stretch of losses since August 2010.

Commodities

Oil rose 0.3 percent to $54, near the highest level since July 2015. Crude capped a third weekly gain on Friday as the U.S. imposed fresh sanctions on Iran after a missile test and OPEC reached about 60 percent of its output-cut target.

Gold advanced for a third day, climbing 0.3 percent to $1,223.51, which would be the highest closing level since November.

Iron ore tumbled for a second day, with futures dropping 3 percent.

Bonds

Australian 10-year yields dropped for the first time in four sessions, falling three basis points to 2.77 percent.

The yield on 10-year Treasuries lost less than one basis point to 2.46 percent.