WELLINGTON/HONG KONG (Dec 18): Asian stocks climbed, with the regional benchmark index rebounding from an almost nine-month low, after a Federal Reserve pledge to be patient on interest-rate increases sent U.S. equities up the most since 2013. Metals advanced and oil swung between gains and losses.
The MSCI Asia Pacific Index advanced 0.9 percent by 11:27 a.m. in Tokyo, as Hong Kong’s Hang Seng Index climbed from its lowest since May and Japan’s Topix index headed for its biggest gain in six weeks. Standard & Poor’s 500 Index futures were little changed after the U.S. gauge jumped 2 percent, erasing about half of its December drop. Crude oil traded at $56.57 a barrel in New York. China’s yuan was at the weakest since July. Gold climbed 0.3 percent and nickel added 0.9 percent in London.
The Fed said it will be patient when it comes to the timing of rate increases, replacing a pledge in its statement to keep borrowing costs near zero for a “considerable time,” and raising its assessment of the job market. While falling unemployment is pushing the U.S. toward higher borrowing costs, plunging oil prices are holding inflation below target. Russian President Vladimir Putin holds a media conference amid the ruble’s slump.
“Asian markets will be comforted by the rise in the U.S.,” Angus Gluskie, managing director at White Funds Management in Sydney where he oversees about $550 million, said by phone. “But it doesn’t really alter the fundamentals, which are growth in the U.S. is good and the sharp drop in the oil price and Russian currency are still likely to destabilize markets.”
Sony Gains
The MSCI Asia Pacific Index closed at the lowest since March 31 yesterday, having lost 5 percent since the end of November. BHP Billiton Ltd., the world’s biggest miner and Australia’s No. 1 oil producer, was the biggest drag on the measure through that period as plunging crude prices dragged a Bloomberg gauge of global commodities to five-year low on Dec. 16.
The Topix rebounded 2.5 percent from its lowest level since Oct. 31 and the Nikkei 225 Stock Average rallied 2.5 percent.
Sony Corp. climbed 4.1 percent in Japan after its movie production unit, Sony Pictures, canceled plans to release “The Interview” on Dec. 25 amid pressure from cyberterrorists who broke into the company’s computers and threatened violence against filmgoers. The movie is about a plot to assassinate North Korean leader Kim Jong Un.
Energy and mining companies drove a 1.1 percent increase in Australia’s S&P/ASX 200 Index, while the NZX 50 Index added 0.6 percent in Wellington. South Korea’s Kospi index slid 0.4 percent.
The Hang Seng Index, which entered a correction this week having fallen more than 10 percent from a recent high, added 0.9 percent today. A gauge of Chinese stocks in the city climbed 1.3 percent as property prices fell in 67 of 70 Chinese cities in November, improving from 69 in October.
U.S. Rebound
Yesterday the S&P 500 made up about 40 percent of the ground it lost since touching a record 2,075.37 on Dec. 5. The index jumped back above 2,000 and its 50-day moving average of 2,002.89, levels that when breached Dec. 15 led to amplified selling. Yesterday’s gain -- it closed at 2,012.89 -- boosted the gauge’s 2014 return to 8.9 percent. The S&P 500 was down almost 5 percent in December as of Dec. 16.
The Dow Jones Industrial Average increased 1.7 percent, while the Russell 2000 Index of small-cap shares jumped 3.1 percent, the most since Dec. 20, 2011.
U.S. CPI
The U.S. consumer-price index dropped 0.3 percent in November from the previous month, the most since December 2008, after being little changed the prior month, a Labor Department report showed yesterday. The retreat was led by a plunge in fuel costs, with WTI oil down 42 percent this year amid concern over waning demand and a global glut in the commodity.
Persistently low inflation allows Fed policy makers to take a wait-and-see approach to raising key borrowing costs, while plunging fuel costs free up money for households to spend on other goods and services, firming the economic expansion. Yields on 10-year Treasury notes were little changed at 2.14 percent after rising eight basis points in New York.
South Korea’s won slipped for a second day, sinking to 1,102.35 per dollar as the yen was little changed at 118.63 per dollar. The greenback surged as much as 2.1 percent versus Japan’s currency last session as the Bloomberg Dollar Spot Index jumped 0.9 percent, the most since October.
China’s yuan weakened 0.25 percent to 6.2130 per dollar as of 10:24 a.m. in Shanghai, according to China Foreign Exchange Trade System prices, the weakest level since July 4. The People’s Bank of China cut the yuan’s reference rate for the yuan by 0.09 percent, the most since Nov. 6, to 6.1195 per dollar. The central bank has raised the fixing 0.24 percent this month even as the greenback gained.