Asian stocks rose for a second day on Friday, paring a weekly decline, after the Bank of England (BOE) eased policy and as investors looked to Friday’s US jobs report for clues on the likely trajectory of US interest rates.
The MSCI Asia Pacific Index climbed 0.3 percent to 135.76, trimming its drop this week to 0.5 percent from 136.41 on July 29. Hong Kong’s Hang Seng Index advanced 1.5 percent on bets the People’s Bank of China would inject more stimulus into Asia’s largest economy, while Japan’s TOPIX fell 0.2 percent after seesawing most of the day.
Asian equities last month rose the most since March amid expectations developed nations would add stimulus to cope with the threat to global growth from Britain’s vote to leave the EU. They have struggled to hold onto those gains this week after Japan’s package of support measures disappointed many investors. The BOE unveiled additional spending aimed at containing the fallout from Brexit, as it cut rates to a record on Thursday.
“In spite of the fact that it’s the first rate cut in seven years in the UK, it was widely picked that this would occur,” said Michael McCarthy, chief market strategist at CMC Markets Asia Pacific Pty in Sydney.
Markets will be in wait-and-see mode before US payrolls “and the potential impact on [US] Federal Reserve actions and US interest rates,” he said.
A 19 percent surge in Japan’s currency this year has wiped out almost half a trillion yen (US$4.9 billion) from the operating income of Japan’s seven automakers in the first quarter, with Toyota Motor Corp alone taking a ￥235 billion hit. Toyota on Thursday predicted a 37 percent drop in future earnings. Still, its shares rose 3 percent on Friday after first-quarter profit beat analyst estimates.
Taiwanese shares moved higher on Friday amid ample liquidity after the BOE rate cut and stimulus measures, dealers said.
Interest in large-cap stocks, especially the bellwether electronics sector, propelled the broader market past the 9,100 point mark before retreating toward the end of the session, they said.
The TAIEX closed up 0.8 percent at 9,092.12. It was also 1.2 percent higher from 8,984.41 on July 29.
Advancers on Friday included Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the most heavily weighted stock in the local market which rose 1.4 percent, and chip designer MediaTek Inc (聯發科) which climbed 2.7 percent, as well as select old economy stocks.
“It was another liquidity-driven session today. I think foreign institutional investors encouraged by the BOE’s move served as a driver of the upturn on the local main board,” Ta Ching Securities (大慶證券) analyst Andy Hsu (許博傑) said.
“The BOE’s QE [quantitative easing] simply raised the liquidity levels in the global financial markets, creating spill-over effects into the region,” Hsu said. “A stronger [New] Taiwan dollar today is evidence that foreign investors moved more of their funds into the country, giving a boost to the equity market.”
Taiwan Stock Exchange data showed that foreign institutional investors bought a net NT$12.03 billion (US$381 million) worth of shares on Friday.
Hong Kong’s Hang Seng Index rose the most in three weeks and a gauge of Chinese stocks listed in the territory jumped 1.4 percent. China Vanke Co (萬科), the nation’s largest residential property developer, closed up 1.8 percent in Hong Kong after China Evergrande Group (中國恒大集團) bought a substantial stake in the company.
Finance companies led a 0.9 percent advance on India’s S&P BSE SENSEX, the biggest increase in almost two weeks. Tata Steel Ltd added 1.6 percent after the government extended the minimum import prices of steel.
Indonesia’s Jakarta Composite Index rose 0.9 percent after the nation’s second-quarter growth beat estimates on an increased in government spending.
South Korea’s KOSPI added 0.9 percent, Australia’s S&P/ASX 200 Index rose 0.4 percent and New Zealand’s S&P/NZX 50 Index increased 0.1 percent.
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