Asian stocks extend five-month high after Yellen rate comments
By Bloomberg
Asian stocks gained, with the regional benchmark extending a five-month high, after Federal Reserve Chair Janet Yellen indicated an increase in interest rates is unlikely before mid-year.
Techtronic Industries Co., a maker of power tools that gets about 73 percent of sales from North America, climbed 3.8 percent in Hong Kong. Daewoo Engineering & Construction Co. gained 7.7 percent in Seoul after being upgrade to buy at Samsung Securities Co. Sands China Ltd. slipped 5.8 percent, pacing losses among casino operators, amid weak gambling revenue over the Lunar New Year holiday period. Genting Singapore Plc dropped 6.2 percent after reporting a slump in profit.
The MSCI Asia Pacific Index climbed 0.6 percent to 146.20 as of 4:17 p.m. in Hong Kong after closing at its highest since Sept. 12 on Tuesday. The Standard & Poor’s 500 Index advanced to a fresh record after Yellen told the Senate Banking Committee that wage growth remain too low even as the job market improves, and signaled that a change in the Fed’s guidance on interest rates won’t lock it into a timetable for tightening.
“Equities are slightly fully priced but aren’t unduly expensive,” Angus Gluskie, managing director at White Funds Management in Sydney, where he oversees about $550 million, said by phone. Yellen’s statement “doesn’t alter anything from our perspective as investors. We’re not yet in a fully synchronized global recovery but broadly most economies are developing in a right way. There are black spots. Chinese economic activity has been a concern.”
South Korea’s Kospi index and Taiwan’s Taiex index each advanced 0.7 percent. Japan’s Topix index was little changed. Singapore’s Straits Times Index increased 0.2 percent. Australia’s S&P/ASX 200 Index added 0.3 percent. New Zealand’s NZX 50 Index jumped 2.1 percent to a record close. Hong Kong’s Hang Seng Index rose 0.1 percent.
China PMI
China’s Shanghai Composite Index fell 0.6 percent as mainland markets resumed trading following the Lunar New Year holidays. A preliminary gauge of manufacturing activity for February from HSBC Holdings Plc and Markit Economics unexpectedly rose to 50.1 from a final reading of 49.7 the month before. Numbers below 50 signal contraction in the sector.
“The PMI number was slightly better than expected but investors are still nervous that the economy is not strong enough to generate topline growth,” said Khiem Do, who helps oversee about $60 billion as Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management Ltd. “There’s a gap of perceptions between investors and the government. The economy needs more monetary easing measures.”
U.S. Shares
Futures on the S&P 500 were little changed. The U.S. equity benchmark climbed 0.3 percent yesterday to a fresh record high. The Nasdaq Composite Index added 0.1 percent, climbing for a 10th straight day to bring it within 1.6 percent of its 2000 record.
Yellen repeated that the Fed’s pledge to be “patient” on beginning to raise the benchmark interest rate means an increase is unlikely for “at least the next couple” of meetings.
Euro-area finance ministers agreed to extend a bailout program for Greece after the government said it would undertake measures including a revamp of tax collection. International Monetary Fund Managing Director Christine Lagarde said Greece’s policy proposals fall short on key changes and may not meet the lender’s benchmarks for aid to continue.