Asian stocks rise for second day amid rally in commodity prices

Businessmen looking at an electronic stock indicator flashing the Tokyo stock index at noon in Tokyo on May 10, 2016.
Businessmen looking at an electronic stock indicator flashing the Tokyo stock index at noon in Tokyo on May 10, 2016. PHOTO: AFP

SINGAPORE (BLOOMBERG) - Asian stocks rose on Wednesday (May 11), with the regional benchmark index heading for a second day of advance, as Japanese shares rallied amid a recovery in commodity prices.

The MSCI Asia Pacific Index added 0.3 per cent to 127.99 as of 9:02 am in Tokyo. Japan's Topix index gained 0.9 per cent as the yen traded near a two-week low.

South Korea's Kospi index added 0.3 per cent while Australia's S&P/ASX 200 Index gained 0.3 per cent. Markets in China and Hong Kong have yet to start trading.

The bearish sentiment that hit traders in the past two weeks eased amid a bounce in commodities, with US stocks rising the most in two months on Tuesday.

"We're seeing follow-through buying given the bounce in commodities and rally in US shares," Chris Green, the Auckland-based director of economics and strategy at First NZ Capital Group, said by phone. "Prospects of a delay in the Fed raising interest rates and firmer inflation data out of China are supportive of equities in the near term."

Evidence of firming inflation in China ignited gains in industrial metals on Tuesday, fueling a 2 per cent climb in Bloomberg's Commodity Index along with the gains in crude oil.

The equity-market bounce follows a selloff last week that erased more than US$1 trillion of value amid evidence of lackluster growth in the world's biggest economies, which called into question the effectiveness of central-bank stimulus. The S&P 500 Index began its rebound on Friday as worse-than-estimated jobs data spurred speculation the Federal Reserve will adopt a slower approach to tightening US monetary policy.

Futures on the FTSE China A50 Index rose 0.1 per cent in their most recent trading, as did those those for the Hang Seng Index. The Hang Seng China Enterprises Index of mainland shares traded in Hong Kong climbed 0.4 per cent on Tuesday after factory-gate deflation narrowed more than expected and consumer prices rose for a third month. The Shanghai Composite Index closed little changed.

While Tuesday's price report boosted optimism that deflationary pressures are easing in China, other recent data show March's pickup in economic indicators hasn't carried over to April, with manufacturing gauges missing predictions and imports dropping for an 18th straight month. Faster inflation may cut the odds for more monetary easing, while a People's Daily's interview with an "authoritative person" published on Monday signaled no more demand for stimulus, according to a report from the Royal Bank of Scotland Group.

Futures on the S&P 500 were little changed. The US equity benchmark index jumped 1.3 per cent on Tuesday, the most since March 11, as energy producers rallied and climbed to an all-time high.