Asian stocks on course to end strong week

The Shanghai Stock Exchange Composite Index is displayed on an electronic stock board outside a securities firm in Tokyo.
The Shanghai Stock Exchange Composite Index is displayed on an electronic stock board outside a securities firm in Tokyo.PHOTO: BLOOMBERG

SYDNEY (BLOOMBERG) - Asian stocks were on course on Friday (Oct 21) to end a strong week as commodity producers drove gains following Chinese data and as investors concluded that Hillary Clinton maintained an edge over Donald Trump in the last US presidential debate.

The MSCI Asia Pacific Index fell 0.2 per cent to 139.96 as of 9.11am in Tokyo, tracking a retreat in US shares. Japan's Topix index swung, with exporters advancing amid expectations corporate earnings for the September quarter may not be as bad as expected with results beginning to trickle in amid a weaker yen.

The regional benchmark gauge has climbed 1.4 per cent this week with commodity producers leading the rally as data indicated Chinese economic growth is stabilizing.

Australia's S&P/ASX 200 Index lost 0.1 per cent. South Korea's Kospi index retreated 0.3 per cent.

With investors bracing for the US Federal Reserve to lift interest rates before the end of the year and a presidential election next month, companies from Microsoft to Keppel in Singapore are updating shareholders on profit performance. Odds on the Fed raising rates by December have increased by about two percentage points over the past week, to 68 per cent, according to Fed funds futures tracked by Bloomberg.

"If you've been well invested over the last several years and you've made some big gains, it's sensible to bank some of those and have a neutral to defensive position," Mark Lister, head of private wealth research at Craigs Investment Partners in Wellington, which manages about US$7.2 billion, said by phone. "But unless something comes out of left field, the Fed will hike in December and that means the economy is on a solid footing and that's positive. As Microsoft shows, there are still some solid companies."

The earnings season in the US and Europe has so far been a mixed bag, with lacklustre earnings forecasts from Nestle and EBay, while American Express and Deutsche Lufthansa had better-than-expected projections on Thursday.

Futures on the S&P 500 Index were little changed after the underlying gauge retreated 0.1 per cent on Thursday. Microsoft surged as much as 5.8 per cent in after-hours trading after first-quarter sales and earnings topped analysts' estimates, buoyed by growing demand for cloud-based software and services.

Meanwhile, banks led European shares higher after European Central Bank President Mario Draghi said the central bank probably won't stop its asset buying abruptly.