Asia: Stocks extend climb after Apple rally as oil, metals rise

[WELLINGTON] Asian stocksrallied into a second day, led by commodity and technology companies amid an oil-led revival in raw materials and after Apple Inc drove a rebound in the US.

Japanese shares climbed as the yen nursed last session's retreat against the dollar, with US crude holding around a six-month high and continued gains in industrial metals bolstering investors' appetite for risk.

Technology stocks rose after Apple jumped the most since March as Warren Buffett's Berkshire Hathaway Inc disclosed a stake in the world's most valuable company. Australian and New Zealand government debt tracked a drop in Treasuries amid speculation over the outlook for US monetary policy. Gold advanced.

Berkshire Hathaway's disclosure of a US$1.1 billion stake in Apple reinvigorated a stock that has slumped more than 10 per cent this year amid concern over the faltering smartphone market.

The pickup in commodity prices is also righting global equities after weaker economic data and disappointing company earnings wiped out almost US$2 trillion of value in the first two weeks of May.

Investors trying to get a better handle on the outlook for US monetary policy are looking ahead to the release of minutes from the Federal Reserve's April meeting due Wednesday, as other central banks struggle to fuel inflation.

"Markets seem to be in a relatively sweet spot with a steadily stronger US dollar and resilient commodities prices," Angus Nicholson, a markets analyst at IG in Melbourne, said by e-mail. "Many investors have been predicting a pullback in markets, but despite all the negativity, markets have continued to grind higher."

STOCKS

The MSCI Asia Pacific Index added 0.3 per cent as of 10.02am Tokyo time, with sub-indexes of raw-material, energy and technology stocks rallying at least 0.5 per cent.

Japan's Topix index gained 0.6 per cent, while the Kospi index in Seoul slipped 0.2 per cent. Energy producers and mining companies led Australia's S&P/ASX 200 Index up 0.5 per cent, while New Zealand's S&P/NZX 50 Indexrose 0.8 per cent as utilities drove gains.

Futures on the S&P 500 Index dropped 0.1 per cent following a 1 per cent climb in the underlying measure on Monday, as Apple - the biggest stock in the index by market value and weighting - rose 3.7 per cent.

Contracts on Hong Kong's Hang Seng Index advanced 0.4 per cent in most recent trading.

The Reserve Bank of Australia releases minutes of its May meeting on Tuesday, and data on inflation expectations in New Zealand is also due. Japan reports on industrial output and Hong Kong updates its jobless rate.

CURRENCIES

The yen was little changed at 108.95 per dollar after slipping 0.4 per cent last session amid a bounce in commodity- linked currencies.

"We're no longer looking at the yen trading at 105 per dollar as the situation has improved greatly. The environment is quite decent for Japanese stocks," Toshihiko Matsuno, chief strategist at SMBC Friend Securities in Tokyo, said by phone. "But investors still want more positive factors to buy aggressively. They want to wait and see the gross domestic product announcement and the Federal Reserve minutes released tomorrow."

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, was steady for a second session, after rallying 0.9 per cent last week in a second straight weekly gain.

Odds of the Fed raising rates next month remain below 4 per cent, though the probability of a hike in September has ticked up to 37 per cent, from 29 per cent a week ago.

Jeffrey Lacker, president of the Richmond Fed, said in an interview with the Washington Post that the case for raising borrowing costs in June is "pretty strong." The Korean won gained 0.3 per cent, snapping a two-day decline, while Malaysia's ringgit added the same amount amid crude's recovery. Australia's dollar was little changed at 72.86 US cents following a 0.3 per cent increase.

BONDS

Australian bonds led the retreat in Asia, with yields on 10-year notes rising five basis points, or 0.05 percentage point, to 2.28 per cent. Rates on similar maturity Treasuries dropped one basis point to 1.75 per cent after jumping five basis points last session.

Yields on New Zealand government debt due in a decade gained four basis points to 2.65 per cent, while those on Japanese bonds were little changed at negative 0.101 per cent.

The US Treasury Department released a breakdown of Saudi Arabia's holdings of US debt Monday, after keeping the figures secret for more than four decades. The stockpile stood at US$116.8 billion as of March, down almost 6 per cent from a record in January, according to the data.

COMMODITIES

West Texas Intermediate crude gained 0.2 per cent to US$47.81 a barrel, after jumping 3.3 per cent last session. Futures are extending gains at their highest level since November after Goldman Sachs Group said the market moved into a deficit earlier than analysts expected amid an increase in demand and supply disruptions in Nigeria. Brent was steady at US$48.94.

In London, copper for three-month delivery climbed for a third day, gaining 0.4 per cent to US$4,665 a metric ton as nickel and aluminum rose at least 0.2 per cent. Lead increased 0.3 per cent after surging 1.6 per cent last session.

Precious metals also rallied, with gold gaining 0.2 per cent to US$1,276.30 an ounce in the spot market. Silver, platinum and palladium advanced at least 0.3 per cent.

BLOOMBERG