WELLINGTON (BLOOMBERG) - Asian stocks outside Japan rose to their highest level of the year on Friday (March 18) as oil held gains above US$40 a barrel and the US dollar sank to its weakest level since June, weighed down by the Federal Reserve's shift to a more dovish stance. A resurgent yen sent Japanese shares lower.
The MSCI Asia Pacific excluding Japan Index is back to where it was in December, having rebounded 15 per cent since tumbling to a four-year low in January.
South Korea's won was headed for its biggest two-day gain since June 2010 versus the dollar and the yen strengthened for a fifth day, its longest winning streak since early January. The yuan climbed to a three-month high as China's central bank boosted the currency's fixing by the most since November.
The Fed on Wednesday added fuel to the recovery in global equities by reining in its forecast for interest-rate hikes this year to two this year.
The move complemented a wave of monetary easing that saw Norway and Indonesia cut borrowing costs on Thursday, a week after the European Central Bank unleashed unprecedented stimulus to spur economic growth. Risk appetite also got a boost on Friday from data showing a recovery in China's property market is gaining traction, with prices increasing in the most cities since March 2014.
MSCI's Asia Pacific excluding Japan gauge climbed 0.7 per cent as of 12:07 pm Tokyo time, headed for a 2.2 per cent weekly gain. The Shanghai Composite Index advanced 1.6 per cent and was up 5 per cent for the week, its best performance in four months. Japan's Topix index fell 1.2 per cent, led by declines in exporters.
Singapore's Straits Times Index was up 0.83 per cent at 2,903.96 as of 12:56 am. The STI climbed 1.3 per cent on Thursday after the Fed meeting.
"There's concern for exporters' earnings," said Nobuyuki Fujimoto, a senior market analyst at SBI Securities Co. "If the yen's trading around 114 to the dollar then companies will expect profits next fiscal year, but when its 110, most exporters will post losses."
The yen, which typically moves at odds with Japanese stocks, appreciated 0.1 per cent to 111.32 per dollar. The currency is set for a weekly advance of 2.3 per cent.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, was little changed early Friday following a two-day slide of more than 2 per cent.
The won strengthened 0.9 per cent, headed for a 2.6 pe rcent weekly advance. The ringgit rose to a seven-month high as US$40 oil brightened prospects for Asia's only major net exporter of crude.
West Texas Intermediate oil gained 0.2 per cent to US$40.27 a barrel, after soaring 11 per cent over the last two days. Along with the dollar's retreat, crude was supported this week by data showing US output fell to the lowest level since November 2014 as well as a planned output freeze by some of the world's biggest producers.
Copper rose 0.6 per cent in London, headed for a 2.7 per cent weekly advance. Rallied in industrial metals helped push the Bloomberg Commodity Index to a three-month high on Thursday.