Asia: Stocks jump with oil as Brexit spurs stimulus speculation

[WELLINGTON] The relief rally endured, with Asian stocks, commodities and high-yielding currencies rising amid speculation policy makers will blunt the impact of the UK's decision to leave the European Union with stimulus measures.

The Asian equity benchmark advanced for the second time this week, as ongoing gains in crude oil boosted raw materials shares from Japan to Australia.

Nickel extended Tuesday's 4 per cent rebound as the US dollar weakened against currencies from New Zealand to South Korea. Even the havens rose, with gold and the yen resuming gains. Sterling fluctuated after rallying from a 31-year low, while FTSE 100 Index futures advanced. Bonds were mixed.

The UK vote to secede from the EU spurred a flight out of risk assets amid uncertainty over the implications of the decision and concern it could disrupt the global economic recovery.

Investors are now looking to central banks for support as Britain dithers on a plan for its extrication from the bloc. South Korea is planning a package of fiscal stimulus and Bank of Japan chief Haruhiko Kuroda said more funds can be injected into the market should they be needed. Traders are now pricing in the chance of a US rate cut, after pushing odds of a hike by the end of the year to 50 per cent before the referendum.

"The Brexit crisis looks like it may be heading into an awkward period of uncertainty," Angus Nicholson, a markets analyst at IG Ltd in Melbourne, said in an e-mail to clients.

"If the Brexiteers look like they are veering toward leaving the single market then global markets will begin to sell off sharply. If the Brexiteers look like they are trying to push for some sort of 'Norway Plus' deal, then they will start to rally."

Stocks

The MSCI Asia Pacific Index climbed 0.8 per cent as of 9:40 am Tokyo time, as the Topix index rallied 0.9 per cent in Tokyo. Technology and energy shares were the biggest gainers in Australia, where the S&P/ASX 200 Index rose 0.5 per cent.

New Zealand's S&P/NZX 50 Index climbed a third day, adding one per cent, while the Kospi index in Seoul increased 0.7 per cent, also extending gains.

Futures on the S&P 500 Index slipped 0.2 per cent 2,025.50. The US benchmark jumped 1.8 per cent last session, the most since March, after European shares halted their post-Brexit vote selloff. In the UK, contracts on the FTSE 100 were up 0.8 per cent, after soaring 2.6 per cent on Tuesday.

Currencies

The pound was little changed at US$1.3330 after gaining 0.9 per cent last session, halting a two-day selloff that reduced it by 11 per cent against the greenback. The euro was steady at US$1.1070 after French President Francois Hollande said the currency wasn't put into difficulty by the UK vote.

The yen rose 0.3 per cent to 102.46 per US dollar following Tuesday's 0.7 per cent decline, which saw the retreat from haven assets move to include the US dollar.

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, was steady after falling 0.5 per cent last session following a two- day, 2.7 per cent advance.

"This is the first sign of Brelief for markets, as positioning improves following the leave vote," Con Williams, a rural economist in Wellington at ANZ Bank New Zealand Ltd, said in a note to clients.

"Investors also appear to be taking stock and pondering the long game, as well as having expectations of continued central bank support."

Turkey's lira was little changed at 2.9073 a US dollar after strengthening 1.2 per cent last session. Suicide bombers killed at least 36 people at Istanbul's main international airport late on Tuesday, and more than 147 people were said to have been injured.

Commodities West Texas Intermediate crude climbed 0.6 per cent to US$48.12 a barrel, building on last session's 3.3 per cent jump, while Brent was up 0.3 per cent to US$48.73.

BLOOMBERG

For more coverage of the EU referendum, visit bt.sg/BrexiT