Asia Stocks Rise as Dollar Extends Four-Year High on U.S.

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By Kevin Buckland and Adam Haigh

Asian stocks climbed and the dollar extended a four-year high after surging U.S. new-home sales signaled improvement in the world’s biggest economy. Gold retreated and New Zealand’s dollar slid after the central bank said again that its strength is unjustified.

The MSCI Asia Pacific Index added 0.4 percent at 11:19 a.m. in Tokyo, rising from a more-than three-month low as the Topix index advanced 1.1 percent. Standard & Poor’s 500 Index futures dropped 0.1 percent after the U.S. gauge halted a three-day slide. The U.S. currency strengthened against most major peers as the yen slid and the so-called kiwi plunged 0.6 percent. Gold fell to $1,213.68 and silver dropped 0.6 percent.

The U.S. reports durable-goods orders and initial jobless claims numbers today after new-home sales surged in August to the highest level in more than six years. Chinese President Xi Jinping is considering replacing People’s Bank of China Governor Zhou Xiaochuan, the Wall Street Journal said yesterday, citing unidentified officials. Reserve Bank of Australia Governor Glenn Stevens will speak in Melbourne.

“The dollar has gone near vertical,” said Imre Speizer, a markets strategist at Westpac Banking Corp. in Auckland. “In the near term, the momentum is very strong. And the economic data has continued to surprise on the upside more often than not.”

The Bloomberg Dollar Spot Index is climbing for a fifth straight day after yesterday closing at the highest in more than four years. The measure is heading for its biggest quarterly gain since the period ended Sept. 30, 2011.

The greenback was stronger against 11 of 16 major peers today, buying 109.17 yen. The Australian dollar weakened 0.5 percent to 88.44 U.S. cents.

‘Downward Adjustment’

The kiwi bought 80.23 U.S. cents, the least since September last year, as Reserve Bank of New Zealand Governor Graeme Wheeler said in a statement that the currency is “susceptible to a significant downward adjustment.”

“The real exchange rate has not adjusted materially to the recent downward movement in commodity prices,” Wheeler said in the statement, citing a 45 percent decline in dairy prices since February. “The Bank’s analysis indicates that the real exchange rate is well above its sustainable level.”

The euro held at $1.2776 after falling 0.5 percent yesterday to below $1.28 for the first time in 14 months on bets the European Central Bank will add further monetary stimulus. The Stoxx Europe 600 Index gained 0.7 percent following two days of losses.

Gold dropped 0.3 percent today and silver retreated to $17.5926, taking its loss since the end of June beyond 16 percent, the fourth-biggest quaterly decline in data going back to 1998.

Treasury Auction

The yield on 10-year Treasuries was little changed at 2.57 percent after the U.S. notes fell yesterday for the first time in five days. The U.S. received the lowest demand at a five-year auction this year, with investors speculating the Fed is moving closer to raising interest rates. The yield on 10-year Treasuries rose 4 basis points yesterday.

All 10 industry groups advanced on the Asia-Pacific gauge today. The measure trades at 13.6 times estimated earnings compared with 15.5 times projected profit for the Stoxx Europe 600 index and 16.7 times for the S&P 500.

The Nikkei 225 Stock Average increased 1.2 percent, while Australia’s S&P/ASX 200 Index climbed 0.2 percent. South Korea’s Kospi index advanced 0.1 percent.

China Stocks

Hong Kong’s Hang Seng Index climbed 0.3 percent, advancing for a second day, and the Hang Seng China Enterprises Index of mainland firms listed in the city added 0.3 percent.

The Shanghai Composite Index rose 0.5 percent after closing at the highest since March 2013.

With Zhou, 66, past the typical retirement age for senior officials and a Communist Party leadership meeting looming next month, social media chatter on his possible exit escalated. The China Times this month published an opinion piece on prospects for ex-securities regulator Guo Shuqing taking the job.

Six of 13 economists in a Bloomberg News survey this month cited Guo, 58, as the most likely successor when Zhou does leave. Five predicted it would be People’s Bank of China Deputy Governor Yi Gang, 56.

Data yesterday showed sales of new U.S. houses jumped 18 percent to a 504,000 annualized pace, the most since May 2008. The median forecast of 74 economists surveyed by Bloomberg called for the pace to accelerate to 430,000. The one-month increase was the biggest since January 1992.

Constructive Data

“The U.S. economy continues to exhibit strength,” Matthew Sherwood, head of investment markets research at Perpetual Ltd. in Sydney, which manages about $29 billion, said by e-mail. “U.S. data overnight was more constructive, with a strong surge in new home sales and upward revisions to the historic data also supportive for the U.S. economy.”

The Chicago Board Options Exchange Volatility Index, the gauge known as the VIX (VIX), decreased 11 percent to 13.27 yesterday for the largest decline since Aug. 4. The index had surged 24 percent over the prior three days.

Health-care stocks had the biggest gains among 10 groups in the S&P 500 yesterday, jumping 1.7 percent, amid signs that cross-border deals may continue despite the government’s efforts to curtail inversions. Pfizer Inc. (PFE) climbed 0.9 percent after people with knowledge of the matter said the company has approached Actavis Plc about a deal that could allow it to move its address overseas and reduce taxes.

The S&P 500, which rallied 0.8 percent yesterday, had dropped 1.4 percent during a three-day losing streak after closing Sept. 18 at a record.

To contact the reporters on this story: Kevin Buckland in Tokyo at [email protected]; Adam Haigh in Sydney at [email protected]

To contact the editors responsible for this story: Nick Gentle at [email protected] John McCluskey

 

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