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Asia Stocks Rise as Earnings, U.S. Manufacturing Boost Sentiment

Choong En Han
Updated

(Bloomberg) -- Asian stocks climbed after U.S. economic data generated optimism about the health of the world’s largest economy, while Japan’s Topix index rose as the yen weakened against the dollar.

The MSCI Asia Pacific Index advanced 0.4 percent to 140.49 as of 4 p.m. in Hong Kong after a U.S. manufacturing gauge climbed to the highest since 2015, boosting bets by traders for a rate hike by December to 71 percent. A measure tracking global shares rose on Monday after companies from Rockwell Collins Inc. to TD Ameritrade Holding Corp. announced takeovers, raising optimism in equity markets. South Korea’s Kospi Index retreated from a two-week high over concern that China is trying to cut the number of visitors to the nation.

“If we look at the health of the U.S. economy, it just makes absolute sense to hike in December,” said James Woods, a strategist at Rivkin Securities in Sydney. While stocks may head higher, “it would not be a significant rally until we get the U.S. presidential election and rates out of the way,” he said.

An advance in Asian stocks has fizzled this month as investors pulled back from riskier bets before Americans go to the polls on Nov. 8 and amid uncertainty on when the Federal Reserve will raise borrowing costs. A relatively positive third-quarter earnings season is boosting the regional share gauge, with 58 percent of companies that have reported so far beating estimates.

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Japan’s Topix index rose 0.7 percent to its highest level since May as the yen declined for a second day against dollar. More than 350 companies on the gauge are scheduled to give quarterly updates this week. Precision-motor maker Nidec Corp. jumped 6.1 percent after it raised its full-year net income target on Monday, beating analyst estimates. Kyushu Railway Co. surged 15 percent on its trading debut in Tokyo following a 416 billion yen ($4 billion) initial public offering.

Tourism Curbs

South Korea’s Kospi index lost 0.5 percent as cosmetics firm LG Household & Health Care Ltd. fell 8.3 percent, leading a slump in stocks that rely on Chinese tourists. Kim Yeong Ju, an official at the Korea Tourism Organization in Seoul, said that Chinese authorities are ordering travel agents to curb cheap travel packages to South Korea from November to April 2017. Relations between the two nations have been strained by plans for a U.S. missile defense system to be deployed in South Korea.

The nation’s economy expanded 2.7 percent in the third quarter from a year earlier, slowing from 3.3 percent in the previous three months but beating estimates. SK Hynix Inc., a supplier of memory chips to Apple Inc., gained 2.2 percent in Seoul after profit topped projections.

Taiwan Semiconductor Manufacturing Co., another supplier to Apple, rose 1.1 percent in Taipei, helping to boost the island’s benchmark gauge by 0.7 percent to the highest since June 2015. Apple is due to release results on Tuesday. Australia’s S&P/ASX 200 Index rose 0.6 percent, as did New Zealand’s S&P/NZX 50 Index.

The Shanghai Composite Index closed up 0.1 percent, while Hong Kong’s Hang Seng Index was little changed. The Hang Seng China Enterprises Index of mainland companies traded in Hong Kong added 0.1 percent.

Tata Chairman

India’s S&P BSE Sensex Index fell 0.4 percent, dragged down by Tata Steel Ltd. and Tata Consultancy Services Ltd. after the nation’s biggest business group abruptly ousted its chairman. Tata Group Chairman Cyrus Mistry, 48, was replaced at a board meeting on Monday.

Futures on the S&P 500 Index climbed 0.1 percent. The U.S. equity benchmark advanced 0.5 percent Monday, as T-Mobile US Inc. surged on better-than-estimated results.

St. Louis Fed President James Bullard said on Monday that December is “most likely” for a rate increase, even as he said U.S. borrowing costs are likely to stay very low for several years because of low productivity and investor demand for safe assets.

To contact the reporter on this story: Choong En Han in Kuala Lumpur at echoong6@bloomberg.net. To contact the editors responsible for this story: Jeff Sutherland at jsutherlan13@bloomberg.net, Andrew Janes, Tom Redmond

©2016 Bloomberg L.P.