Asian stocks climbed in choppy trading as investors assessed the European Central Bank’s (ECB) fresh stimulus measures. Financial and technology shares led gains as markets closed higher across the region.
The MSCI Asia Pacific Index added 0.7 percent to 126.40 as of 4:10pm in Hong Kong, reversing a decline of 0.6 percent. The measure is up 0.1 percent over the past five days, heading for a fourth weekly advance.
ECB President Mario Draghi delivered interest rate cuts, more bond purchases and a potential subsidy to lenders, then said the ECB is done with lowering rates for now.
“The market is trying to go back and re-digest that yesterday was an over-reaction and that that one statement was the wrong focus,” said Kay Van-Petersen, a strategist at Saxo Capital Markets in Singapore. “It was taken out of context. It said we don’t anticipate that it’ll be necessary to reduce rates further, but nothing could be further from the truth. It’s QE-for-life [quantitative easing] for the next four to five years in the eurozone.”
The regional equity measure has pared its loss for next year to 4.2 percent as a rebound in oil, other commodities and banking shares helped boost investor sentiment. Stocks in Shanghai are still the worst performers this year among 93 primary indices tracked by Bloomberg with a 21 percent drop. Attention now shifts to economic data from China over the weekend and policy decisions next week by the US Federal Reserve and the Bank of Japan.
Japan’s TOPIX added 0.5 percent on Friday, erasing morning losses of as much as 1.5 percent, as lenders led gains while a weaker yen boosted exporters. South Korea’s KOSPI added 0.1 percent. The TAIEX increased 0.52 percent to 8,706.14, from 8,611.79 on Friday last week. Australia’s S&P/ASX 200 Index rose 0.3 percent. New Zealand’s S&P/NZX 50 Index increased 0.1 percent to close at a record. Hong Kong’s Hang Seng Index climbed 1.1 percent. Singapore’s Straits Times Index advanced 0.7 percent.
The Shanghai Composite Index rose 0.2 percent after swinging in thin afternoon trading. China’s central bank raised its onshore daily reference rate for the yuan by the most in four months on Friday. The National People’s Congress continues, while reports on industrial production, retail sales and fixed assets were released yesterday.
The TOPIX Banks Index gained 2.8 percent in Tokyo, with Mitsubishi UFJ Financial Group Inc adding 3.5 percent. Samsung Electronics Co climbed 2 percent in Seoul, providing the biggest boost to the regional benchmark gauge. CRRC Corp jumped 10 percent in Hong Kong after a unit of China’s largest maker of railway equipment won a US$1.3 billion order to supply train cars to Chicago.
Europe’s central bank reduced the rate on cash parked overnight by banks by 10 basis points to minus-0.4 percent and lowered its benchmark rate to zero. Bond purchases were increased to 80 billion euros (US$89 billion) a month from 60 billion euros, and corporate bonds are now eligible. A new series of long-term loans to banks is scheduled to begin in June.
While the move initially spurred demand for riskier assets, investors took less than 90 minutes to become underwhelmed at the stimulus outlook. The STOXX Europe 600 Index closed 1.7 percent lower after rising as much as 2.5 percent.
Draghi said at a media briefing that risks to the eurozone growth outlook are still to the downside and the rate of inflation is likely to remain negative before picking up later in the year. Still, he said he does not anticipate more rate cuts.
Futures on the Standard & Poor’s 500 Index jumped 1.1 percent. The underlying US equity benchmark index closed little changed on Thursday, erasing losses in the final hour of trading as investors weighed the ECB move and Draghi’s comments.
Energy shares also advanced in Asia on Friday, as oil headed for a fourth weekly gain on signs of rising US fuel demand and easing crude production. PetroChina Co added 2.5 percent in Hong Kong, while Idemitsu Kosan Co rose 1.8 percent in Tokyo.
Additional reporting by staff writer
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