Most Asian stocks advance as consumer, material companies rally

[HONG KONG] Most Asian stocks rose, following a rebound in US equities. Consumer and material shares led gains.

Four shares climbed for each that fell on the MSCI Asia Pacific Excluding Japan Index, which was little changed as of 8:04 am in Hong Kong. Japanese markets are closed for a holiday. US stocks rose after Fed Bank of Atlanta chief Dennis Lockhart joined Fed presidents from San Francisco, St Louis and Richmond on Monday, saying he remains confident policy will be tightened this year as concern over turmoil in global markets touted by Chair Janet Yellen last week should prove temporary.

"While we may see a moderately positive day for Asian equities following gains in US equities, it's hard to see such gains being sustained amid concerns over Fed policy," said Tim Schroeders, a portfolio manager who helps oversee about US$1 billion in equities at Pengana Capital Ltd. in Melbourne. "The reluctance of the Fed to move from very accommodative policy settings seems to indicate how fragile the US economy can be, especially if you look outside the labor market." With Fed Chair Janet Yellen slated to speak later this week, potentially providing more clarity as to whether to expect a rate increase this year, interest-rate futures indicate traders remain skeptical of a move in 2015. Odds of a hike at the next meeting in October are at 20 per cent, according to fed funds futures, while the probability of an increase at the last meeting of the year, on Dec 16, is 48.8 per cent, down from 58.7 per cent a week ago.

Australia's S&P/ASX 200 Index rose 0.4 per cent. South Korea's Kospi index added 0.2 per cent. New Zealand's S&P/NZX 50 Index climbed 0.1 per cent. Markets in China and Hong Kong have yet to start trading.

The Shanghai Composite Index gained 1.9 per cent on Monday, extending its advance for a second day as President Xi Jinping headed to the US for his first state visit.

Industrial and technology companies rallied on speculation they may see increased orders following Xi's visit, which concludes with a summit with President Barack Obama on Friday. Deals announced before the trip include the first Chinese-made bullet-train project in the US.

E-mini futures on the Standard & Poor's 500 Index were little changed. The US equity benchmark index rose 0.5 per cent on Monday.

BLOOMBERG