Asian stocks extend global rally on upbeat US, Aussie data; STI up 1.6%

Pedestrians look at an electronic board showing the Japan's Nikkei average outside a brokerage in Tokyo.
Pedestrians look at an electronic board showing the Japan's Nikkei average outside a brokerage in Tokyo.PHOTO: REUTERS

WELLINGTON/SYDNEY (BLOOMBERG) - A global equities rally gained momentum in Asian trading and emerging-market currencies strengthened on Wednesday (March 2) as economic data from the US and Australia spurred risk-taking.

Asian stocks jumped the most in two weeks, led by gains in Japan. Australia's dollar rose for a third day and the nation's bonds tumbled as the nation's economic growth beat estimates.

The MSCI Asia Pacific Index surged 2.5 per cent as of 11:01 amTokyo time, headed for its highest close since January. Japan's Topix jumped 3.5 per cent, Hong Kong's Hang Seng Index climbed 2.3 per cent and the Shanghai Composite Index rose 0.9 per cent.

Singapore's Straits Times Index was up 1.62 per cent at 2,725.96 as of 11:35 am.

The offshore yuan weakened after China's central bank lowered the currency's reference rate and Moody's Investors Service cut the outlook on the nation's credit rating.

Oil fell for the first time this week after industry data showed American stockpiles increased.

Standard & Poor's 500 Index futures held steady as results of the so-called Super Tuesday US presidential candidate contests started to come in, following the US benchmark's 2.4 per cent surge on Tuesday. Hillary Clinton dominated Democratic Party primary contests among 11 states that voted on Tuesday, while Donald Trumpboosted his chances of securing the Republican Party presidential nomination.

"We are getting a bit of stability in markets," Nader Naeimi, head of dynamic markets at AMP Capital Investors Ltd. in Sydney, which oversees about US$115 billion, said by phone. "Most of the panic is behind us. People are underestimating just how much ammunition central banks have. US growth is slow but steady."

American factory activity in February shrank less than forecast, data last session showed, burnishing the outlook for the world's largest economy as global stocks recover from a four-month losing streak. MSCI Inc's world equity index has gained almost 8 per cent since sinking to a 2 1/2-year low in the middle of last month, spurred by oil's rebound from the lowest price in more than decade.

The Aussie strengthened for a third day, climbing 0.7 per cent versus the US dollar. The commodity-dependent economy expanded 0.6 per cent in the fourth quarter from the previous period, compared with the 0.4 per cent growth rate projected by economists.

The yuan weakened 0.05 per cent in offshore trading after the People's Bank of China cut its daily reference rate for the currency to a four-week low. Moody's cited the drop in China's foreign-currency reserves and increasing government debt for its decision to cut the outlook on the country's Aa3 credit rating to negative from stable.