Asian stocks extend rally as Singapore policy move hits currency, STI up 0.9%

A man looks at a quotation board flashing key indexes of Tokyo and New York stock markets in front of a securities company in Tokyo.
A man looks at a quotation board flashing key indexes of Tokyo and New York stock markets in front of a securities company in Tokyo. PHOTO: AFP

WELLINGTON/TOKYO (BLOOMBERG) - The global stock rally intensified in Asia as renewed optimism over the world economy and company earnings damped demand for haven assets like the yen. Singapore's dollar slumped after policy makers surprised markets by easing monetary policy.

The regional equity benchmark was on track for its longest advance in a year as Japan's Topix index extended gains at an April high. Commodity stocks and banks rallied following a surge in industrial metals prices and after JPMorgan Chase & Co's earnings unexpectedly topped analysts' estimates.

The yen slipped a third day, while Singapore's dollar slid the most in more than two months after the local monetary authority said it will no longer seek gains in the currency versus a basket of peers in a bid to ignite growth.

Oil fell a second day as traders awaited a meeting of producers this weekend.

The MSCI Asia Pacific Index added 0.7 per cent as of 9:34 am Tokyo time, rising a seventh straight day as the Topix jumped 1.5 per cent, extending gains at its highest closing level since March 30.

Stcks in Singapore rallied on the monetary easing with the Straits Times Index up 0.93 per cent at 2,917.34 as of 9:44am.

Markets in India, Sri Lanka and Thailand are closed for holidays Thursday, while Korean trading resumes with President Park Geun Hye failing to win a majority in parliamentary elections held Wednesday. The Kospi index rose 1.3 per cent from Tuesday levels, as banks and industrial companies climbed.

In Australia, the S&P/ASX 200 Index increased 0.7 per cent, with prices for iron ore, the country's biggest export, capping a third day of gains Wednesday.

The combination of signs of improvement in China's economy and a marquee US company defying expectations for a lacklustre reporting season has encouraged a bout of market optimism originally fueled by a rebound in crude oil. Speculation the oil market will soon find some enduring stability has helped prop up equities, with Russia and other major producers due to meet in Doha April 17 to discuss an output freeze. JPMorgan's results countered angst over what's projected to be the worst round of earnings since the financial crisis, with Bank of America and Citigroup to report later this week.

"If global risk-on moves continue, it'll be difficult for the yen to keep strengthening with any determination," Mitsushige Akino, executive officer at Ichiyoshi Asset Management Co. in Tokyo, said by phone. "Since the strength in the dollar has eased, the January to March US earnings won't be as bad as expected. Bank shares, which are the most lagging industry group among the generally lagging Japanese market, should rebound, with the flow of bank stock buying in the US also helping."

The Singapore dollar lost as much as 0.9 per cent in the wake of the monetary body's announcement, touching its lowest point this month. The nation moved to a neutral policy stance of zero per cent appreciation in the currency, according to a statement from the Monetary Authority of Singapore Thursday. Twelve of 18 economists surveyed by Bloomberg had predicted no change in their policy.

"We thought the hurdle was high for a shift to neutral," said Khoon Goh, a senior foreign-exchange strategist at Australia & New Zealand Banking Group Ltd. in Singapore. "Although the MAS said that they have no intention to depreciate the domestic currency, I don't see this as necessarily the end of the easing cycle. If downside growth and inflation risks remain, then the next easing move would be a re-centering in October."

The yen slipped 0.1 per cent to 109.42 per dollar following a two-day retreat of 1.3 per cent. The currency surged to its strongest level since October 2014 on April 7, amid the Federal Reserve's pared back plans for raising US interest rates and speculation the Bank of Japan won't intervene to arrest the yen's strength.