Asia surges with Japan, China stocks in lead, STI up 0.8%

A man walking past a share prices board in Tokyo on Oct 23.
A man walking past a share prices board in Tokyo on Oct 23.PHOTO: AFP

TOKYO (REUTERS) - Asian shares surged on Wednesday (Nov 4) following gains on Wall Street, with Japanese and Chinese stocks leading the way, while investors' stronger appetite for riskier assets pushed up US debt yields.

Spreadbetters saw Asia's upward momentum spilling over into Europe, forecasting a higher open for Britain's FTSE, Germany's DAX and France's CAC.

MSCI's broadest index of Asia-Pacific shares outside Japan gained 1.7 per cent.

Singapore's Straits Times Index was up 0.82 per cent at 3,024.08 as of 1:29 pm

Shanghai stocks advanced 2.6 per cent after President Xi Jinping made economy-friendly comments and the government unveiled proposals for a five-year financial market reform plan.

Xinhua news agency quoted Xi as saying China can maintain annual economic growth of around 7 per cent over the next five years but there were uncertainties, including weak global trade and high domestic debt.

Hong Kong's benchmark jumped 3.0 per cent.

Tokyo's Nikkei surged 2.4 per cent after three firms affiliated with Japan Post made strong trading debuts as investors rushed to get a piece of the group's US$12 billion initial public offering.

"The Japan Post IPO has performed as well as expected this morning, and on top of that we've seen a real sentiment boost based on the monster rally in the US," said Gavin Parry, managing director at Parry International Trading.

Large tech and energy sector gains drove US stocks higher on Tuesday, with an index of 100 major Nasdaq companies finishing at a record closing high.

Investors sold safe-haven bonds as they moved into riskier assets, driving US Treasury yields higher, with the benchmark 10-year note yield climbing to a 1-1/2-month high of 2.225 per cent overnight.

US debt yields supported the US dollar, which gained 0.1 per cent to 121.16 yen. The euro dipped 0.1 percent to $1.0952, extending overnight losses.

Comments by European Central Bank President Mario Draghi on Tuesday that policymakers are willing and able to act if needed weighed on the common currency.

Markets remained firmly fixed on Friday's US non-farm payrolls report and whether the data will support the case for the Federal Reserve to hike interest rates in December.

Before Friday's non-farm payrolls, the markets will have a chance to gauge the health of the US economy through the ADP employment data and the ISM report on services sector sentiment due later in the session.

"We've seen nonfarm payrolls go in a completely different direction from ADP or ISM and we've also seen average hourly earnings or the unemployment rate trigger a U-turn after the initial reaction to payrolls," wrote Kathy Lien, managing director of FX strategy at BK Asset Management. "So traders are rightfully sceptical about whether the labour market report will confirm the Federal Reserve's hawkish bias until the actual report is released."

Elsewhere in currencies, the New Zealand dollar licked its wounds after sliding 1.2 per cent overnight on a further decline in dairy prices and soft jobs data.

The kiwi last traded down 0.2 per cent at $0.6655.

Crude oil took a breather after surging overnight when US gasoline and diesel rallied following an outage on a key pipeline system. The outage added support to oil markets already boosted by fears of supply disruptions in Brazil and Libya.

US crude fell 0.4 per cent to US$47.73 a barrel after rallying 4 per cent on Tuesday. Brent crude dipped 0.3 per cent to US$50.38 a barrel after surging 3.6 per cent.

The possibility of the Fed hiking rates during the year continued to weigh on gold, with spot prices languishing near a 4-week low of US$1,114.10. Higher interest rates would diminish the allure of the non-interest-paying precious metal.