Asia: Stocks outside Japan buoyed by US$40 oil, STI up 0.4%

[TOKYO] Asian stocks outside Japan rose to their highest level this year on Friday (March 18) as crude oil solidified gains above US$40 a barrel and the US dollar held declines incurred after the Federal Reserve tempered its interest-rate outlook. A resurgent yen sent Japanese shares lower.

MSCI's Asia Pacific excluding Japan gauge climbed 0.4 per cent as of 9:27 am Tokyo time, set for its highest close since Dec. 25 and a 1.9 per cent advance in the week. The Topix fell 0.8 per cent, dragging the broader MSCI Asia Pacific Index down 0.2 per cent.

The yen, which typically moves at odds with Japanese stocks, was little changed at 111.41 per US dollar after climbing 1 per cent on Thursday. The currency is set for a weekly advance of 2.2 per cent, the most in a month.

"There's concern for exporters' earnings," said Nobuyuki Fujimoto, a senior market analyst at SBI Securities Co. "If the yen's trading around 114 to the dollar than companies will expect profits next fiscal year, but when its 110, most exporters will post losses."

Singapore's Straits Times Index was up 0.4 per cent at 2,891.72 as of 9:11 am. The STI closed up 1.3 per cent on Thusrday.

Australia's S&P/ASX 200 Index climbed a third consecutive day, adding 0.5 per cent following Thursday's bounce in commodities. Prices for iron ore, the country's biggest export earner, rose 4.7 per cent Thursday, with Bloomberg's Commodity Index jumping 2.1 per cent to its highest level since Dec 4. The Kospi index in Seoul was up 0.1 per cent.

US crude held above US$40 a barrel, close to its highest point of the year, and copper futures were steady following a 2.6 per cent surge.

Oil's more than 50 per cent recovery from an almost 13-year low reached just five weeks ago has underpinned a revival in risk assets, burnishing sentiment among traders bruised from the volatile start to the year.

West Texas Intermediate oil rose 0.2 per cent to US$40.33 a barrel, on track for a weekly climb of 4.8 per cent following Thursday's 4.5 per cent surge.

The revival in equities moved on to a more solid footing this week as the Fed reduced the number of interest-rate hikes it expects to enact in 2016.

Despite stimulus moves in Japan and the euro area having a mixed impact on markets, policy makers pressed ahead this week, with the Fed's dovish comments followed by rate cuts in Norway and Indonesia. The Bank of England held rates at a record low.

"Markets are still settling down after the more-dovish- than-expected Fed," Philip Borkin, a senior economist in Auckland at ANZ Bank New Zealand, said in a note to clients.

"It appears FOMC members have become more concerned with the outlook for the global economy. Markets, of course, started the year with their own case of the jitters, but have shown a little more stability of late. Are central bankers therefore just a little late to the party? Or do they know something that we don't?"

BLOOMBERG