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Asia: Stocks rise on China GDP, US rate-increase outlook

Wednesday, October 19, 2016 - 11:26
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[SINGAPORE] Asian stocks rose for a second day after data out of China showed Asia's largest economy remained stable in the third quarter and amid speculation the Federal Reserve will stick to a gradual tightening of monetary policy.

The MSCI Asia Pacific Index gained 0.3 per cent to 139.75 as of 11:31am in Tokyo. Asian shares were already higher ahead of the much-anticipated Chinese figures after a gauge of global equities jumped the most in almost four weeks on Tuesday. This comes amid mounting speculation that the Federal Reserve will boost interest rates in December and not rush further increases as the US economy remains mixed.

"China's economy is showing further signs of stabilising," said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

"Growth rates are at steady levels and is exactly in line with the state of policies to maintain growth between 6.5 per cent to 7 per cent."

Japan's Topix index rose 0.2 per cent, reversing earlier losses after the Chinese figures, while the yen traded at 103.83 against the US dollar.

Services industries paced the expansion in China in the first three quarters, with the sector growing 7.6 per cent. Industrial output increased 6.1 per cent from a year earlier in September, compared with analysts' median projection for a 6.4 per cent rise.

Chinese consumers continued to prop up the economy, with retail sales rising 10.7 per cent last month from a year earlier, matching economists' median forecast.

Australian Betting South Korea's Kospi index added 0.3 per cent. New Zealand's S&P/NZX 50 Index lost 0.1 per cent after tumbling to a three-month low on Tuesday. Australia's S&P/ASX 200 Index was up 0.4 per cent.

Hong Kong's Hang Seng Index was down 0.2 per cent, while the Shanghai Composite Index climbed 0.3 per cent, extending a 1.4 per cent advance on Tuesday before the release of the economic data.

Tatts Group Ltd soared 15 per cent, the biggest gain on the MSCI Asia Pacific Index. Tabcorp Holdings Ltd agreed to buy Tatts to create a pan-Australian betting company to take on online rivals.

Sharp Corp jumped 9.2 per cent, the second-biggest gain on the Asia gauge, after the company said it anticipates full-year operating profit and net income to "improve drastically" due to efforts to restore profitability and synergies after its merger with Foxconn Technology Group in August.

Fed Odds

Futures on the S&P 500 Index rose 0.1 per cent. The US equity benchmark index climbed 0.6 per cent on Tuesday amid corporate earnings results and speculation that the economy is strong enough to cope with the gradual pace of monetary tightening indicated by policy makers.

Odds on the Federal Reserve raising interest rates by the end of the year are down about five percentage points from where they were a week ago. While the cost of living rose at the fastest pace in five months in September, the increase in prices excluding volatile food and fuel costs trailed estimates, data Tuesday showed.

A separate report showed confidence among homebuilders cooled in October from an 11-month high, reflecting a pause in the market for single-family houses.

"The global economy can withstand gradual rate rises from the Fed," Mr McCarthy at CMC said.

"Overall, growth is much lower than it used to be, but the global economy is still growing."

West Texas Intermediate crude gained one per cent, heading for its second day of advance, as industry data was said to show American stockpiles dropped last week.

BLOOMBERG