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Asian stocks advance on US factory data

Regional benchmark index records its longest winning streak this year

Gulf News

Sydney/London: Asian stocks rose for a sixth day, with the regional benchmark index recording its longest winning streak this year, as US factory orders topped estimates and commodities climbed to a two-month high amid speculation central banks will act to boost economic growth.

BHP Billiton Ltd jumped 2.1 per cent to lead gains among commodity stocks as a surge in raw-materials prices boosted the earnings outlook at the world’s largest mining company. Komatsu Ltd, a Japanese maker of construction equipment that gets 23 per cent of sales in the US, rose 2 per cent. Real Nutriceutical Group Ltd soared 19 percent after billionaire Li Ka-shing increased his stake in the provider of health products.

The MSCI Asia Pacific Index advanced 0.4 per cent to 119.20 as of 5.20pm in Tokyo. Five stocks rose for every three that fell. The gauge climbed to its highest level since May 10 after Eurozone leaders last week agreed to relax conditions for rescuing lenders, easing concern about the region’s debt crisis. The six-day advance is the longest run of gains since December.

“There is some room for the rally to last for the next couple of weeks,” Kelvin Tay, Singapore-based chief investment officer for the southern Asia-Pacific region at the wealth management unit of UBS AG, said in a Bloomberg TV interview. UBS manages about $1.5 trillion (Dh5.5 trillion) globally.

“Sentiment has turned positive. The priority has shifted toward growth from inflation. The hands of the central banks are not so tied and they can look at perhaps easing monetary policy as they try to help stimulate economies.”

US growth

Futures on the Standard & Poor’s 500 Index slid 0.2 per cent on Wednesday with US markets closed for a holiday. The gauge climbed 0.6 per cent yesterday to a two-month high after data showed US factory orders rose in May for the first time in three months.

Australia’s S&P/ASX 200 Index gained 1.1 per cent and South Korea’s Kospi Index rose 0.4 per cent.

Japan’s Nikkei 225 Stock Average advanced 0.4 per cent and the broader Topix Index increased 0.2 per cent. China’s Shanghai Composite Index and Hong Kong’s Hang Seng Index fell 0.1 per cent.

The International Monetary Fund yesterday cut its growth forecast for the US economy as Managing Director Christine Lagarde said further monetary policy easing may be needed by the Federal Reserve if the situation deteriorates.

The US economy will grow 2 per cent this year, the IMF said in a statement on Tuesday, cutting its previous 2.1 per cent estimate.

Interest rates

The European Central Bank and the Bank of England announce interest-rate decisions on Thursday. ECB officials will lower their benchmark rate by 25 basis points to a record low 0.75 per cent, according to the median forecast in a Bloomberg survey of 57 economists.

China may cut lenders’ reserve requirements three more times during 2012, by 0.5 per cent each time, Shanghai Securities News reported on its website on Tuesday. Securities News cited a banking sector development report released by the China Banking Association yesterday.

The Asian benchmark gained 4.3 per cent this year through yesterday, compared with a 9.3 per cent advance by the S&P 500 and a 5.3 per cent increase by the Stoxx Europe 600 Index. Stocks on the Asian benchmark are valued at 12 times estimated earnings on average, compared with a multiple of 13.1 for the S&P 500 and 10.8 times for the Stoxx 600.

BHP Billiton climbed 2.1 per cent to A$32.47. Rio Tinto Group, the world’s third-largest mining company, advanced 2.7 per cent to A$58.97 (Dh222.27) in Sydney.

The Thomson Reuters/Jefferies CRB Index of raw materials climbed 3 per cent yesterday to its highest level since May 10.

Exporters to the US climbed. Komatsu advanced 2 per cent to 1,902 yen (Dh87.57). Li & Fung Ltd, which gets 60 per cent of sales in the US, gained 0.9 per cent to HK$15.08 (Dh7.14) in Hong Kong.

Real Nutriceutical surged 19 percent to HK$2.05. Cheung Kong Holdings Chairman Li Ka-shing increased his stake in the company to 5.01 per cent from 4.97 per cent, according to a disclosure filing to the Hong Kong stock exchange.