Asia: Stocks rise on yen weakness, tech share gains

[SYDNEY] Asian stocks advanced as technology shares continued a rebound and hawkish comments from a Federal Reserve official allayed concerns about the strength of the world's largest economy. The US dollar held gains as the yen weakened.

Japanese shares climbed to the highest since August 2015. Samsung Electronics Co led tech shares for a second day, after the Nasdaq 100 Index jumped the most since November.

Hong Kong equities erased an earlier advance ahead of MSCI Inc's decision on whether to include China's domestic equities in benchmark indexes. Treasuries fell Monday after Fed Bank of New York President William Dudley said halting the tightening cycle now would imperil the economy.

"We've seen some unimpressive economic data recently, but Dudley appears unperturbed by them, providing relief for market participants," said Toshihiko Matsuno, a senior strategist at SMBC Friend Securities Co in Tokyo.

Mr Dudley aligned himself with Chair Janet Yellen in declaring his expectation that a tight labour market will eventually trigger a rebound in inflation data that has been unexpectedly weak in recent months.

His comments were followed by remarks from Chicago Fed President Charles Evans, who said "the current environment supports very gradual rate hikes and slow preset reductions in our balance sheet".

Fed officials last week raised their benchmark interest rate for the third time in six months and pushed ahead on plans to begin reducing the central bank's US$4.5 trillion balance sheet later this year, despite growing concerns over stalling inflation.

Here are some of the key upcoming events:

Vice-Chair Stanley Fischer speaks Tuesday, with Fed officials making making appearances throughout the week.

MSCI announces whether it approved Chinese-listed stocks in its global benchmarks. The US$6.8 trillion onshore market is the world's second largest and accounts for 9 per cent of global stock value, but has been rejected for index inclusion three times by MSCI over issues including capital controls and long trading halts. MSCI's decision is expected Tuesday after the close of US markets.

Stocks

Japan's Topix rose one per cent as of 1:11pm in Tokyo, gaining for a third day to the highest since August 2015.

Australia's S&P/ASX 200 Index slipped 0.4 per cent. The country's largest banks retreated following ratings downgrades from Moody's Investors Service.

South Korea's Kospi was little changed. Samsung rose 2.8 per cent, heading toward the biggest two-day increase since October.

Hong Kong's Hang Seng Index fell 0.1 per cent, reversing an earlier gain of 0.5 per cent, and the Shanghai Composite Index edged up less than 0.1 per cent.

Futures on the S&P 500 Index increased 0.1 per cent. The underlying gauge rose 0.8 per cent Monday as tech and health-care shares climbed. The Stoxx Europe 600 Index rose 0.9 per cent.

Currencies

The yen slid 0.1 per cent to 111.68 per US dollar. The South Korean won dropped 0.4 per cent, and the Australian dollar lost less than 0.1 per cent.

The Bloomberg Dollar Spot Index was flat after advancing 0.4 per cent on Monday. The measure has been climbing after touching the lowest level since October last week.

Bonds

The yield on 10-year Treasuries was little changed at 2.19 per cent, after rising four basis points Monday.

Australian 10-year yields increased two basis points to 2.42 per cent.

Commodities

Oil was little changed at US$44.22 a barrel, after settling at the lowest level since November on Monday. Crude has fallen for four weeks straight as US drillers continue to add rigs, blunting Opec-led efforts to rebalance an oversupplied market. Gold rose 0.1 per cent to US$1,245.19 an ounce, after closing Monday at the lowest in more than a month.

BLOOMBERG