Asia: Most stocks climb before debate as Federal Reserve rate hike looms

[SYDNEY] Most Asian stocks advanced ahead of the second US presidential debate as materials and consumer companies gained.

The MSCI Asia Pacific excluding Japan Index added less than 0.1 per cent as of 8:34am in Hong Kong. Australian stocks climbed while shares in New Zealand and South Korea fell.

US presidential nominee Donald Trump's reputation took a blow ahead of a closely watched debate with Hillary Clinton after a 2005 video surfaced of him talking in vulgar and degrading terms about women. An American jobs report on Friday showed its central bank remains on course to lift interest rates in December.

"This is dangerously close to the election, so it's harder for him to recover," Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd, which oversees about US$121 billion, said by phone.

"It tends to be the case that when it looks more likely that Clinton will win, markets tend to rally. Much will depend on the debate and we will be watching how Trump handles the issue in the debate and what Clinton makes of it."

The debate at Washington University starts at 9pm New York time with Americans due to go to the polls to elect their next president on Nov 8. The stakes couldn't be higher for Mr Trump or the Republican party after the release of the video, which triggered a rush of Republican officeholders to distance themselves from him or call for his exit from the race for the White House.

Traders signalled a slightly higher chance of the Fed raising its key interest rate by the end of this year after Friday's jobs report. Futures indicate a 64 per cent chance the central bank will tighten policy by its December meeting, with the calculation based on the assumption the effective fed funds rate will trade at the middle of the new range after the central bank's next increase.

Payroll gains in the US economy slowed for a third month, while August hiring was stronger than initially estimated, Labor Department data showed Friday.

"The jobs numbers were good enough to keep a Fed rate hike on track for December, but not strong enough to signal a quickening in the pace of Fed hikes - it's still going to be very gradual," said AMP's Mr Oliver.

Australia's S&P/ASX 200 Index rose 0.4 per cent, set for the highest close since Aug 26. UGL Ltd surged 48 per cent in Sydney trading after Cimic Group Ltd, the Australian construction company controlled by Germany's Hochtief AG, offered to buy the rest of UGL in a deal valuing the engineering firm at A$524 million (S$546 million).

South Korea's Kospi index fell 0.1 per cent, dragged lower by Samsung Electronics Co. The smartphone maker has been dealt another blow stemming from problems with its flagship Galaxy Note 7 as AT&T Inc stopped all sales of the smartphone over safety concerns. Its shares lost 3.5 per cent in Seoul.

New Zealand's NZX 50 Index slipped 0.3 per cent. Equity markets are closed in Japan, Taiwan and Hong Kong.

China's beleaguered stock investors will be hoping mainland equities track the ascent of their Hong Kong-listed peers as the nation's financial markets reopen after a weeklong break.

BLOOMBERG