By Patrick Rial
Nov. 11 (Bloomberg) -- Asian stocks and the currencies rose as Japan’s machinery orders surged, China’s industrial production accelerated and South Korea’s unemployment fell. Gold futures reached a record high.
The MSCI Asia Pacific Index advanced 0.4 percent to 118.57 as of 4:27 p.m. in Tokyo, extending its four-day increase to 3.4 percent. The Japanese yen climbed on confidence exports will pick up as Asian growth accelerates. China’s Shanghai Composite Index reversed gains as lending growth slowed in October.
HSBC Holdings Plc led the advance in Hong Kong after saying third-quarter profit was “surprisingly ahead” of its projections. Nippon Telegraph & Telephone Corp., Japan’s former telephone monopoly, rose after Goldman Sachs Group Inc. recommended buying the shares.
“Asian economies are set to recover ahead of other regions,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages the equivalent of $38 billion. “That’s the reason why exports and industrial production are improving so quickly. Next year’s growth will be led by Asian economies.”
U.S. Treasuries weren’t traded today as the market closed for the Veteran’s Day holiday. Federal Reserve Bank of Dallas President Richard Fisher said yesterday the most likely outcome for the U.S. “is for growth to be suboptimal, unemployment to remain a vexing problem and inflation to remain subdued.”
Gold
Treasury Secretary Timothy Geithner said a strong dollar is in the nation’s interest and the government recognizes the importance it plays in the global financial system.
Gold futures in New York increased for an eighth-straight session today in after-hours trading, rising to a record $1,111.40 an ounce. Newcrest Mining Ltd., Australia’s largest gold producer, gained 0.5 percent.
Oil traded near $79 a barrel after American Petroleum Institute said late yesterday U.S. crude and fuel stockpiles rose, outweighing signs of economic expansion. Crude oil for December delivery traded at $78.85 a barrel, down 20 cents, in electronic trading on the New York Mercantile Exchange.
Orders for Japanese machinery, an indicator of business investment intentions, climbed 10.5 percent in September, while economists had forecast a 4.1 percent increase. Omron Corp., a maker of factory automation systems, advanced 1.4 percent to 1,486 yen.
“The bottom is probably behind us for capital spending,” said Masamichi Adachi, a senior economist at JPMorgan Chase & Co. in Tokyo. “The retrenchment phase is over and the corporate sector as a whole should gradually pick up in a self-sustained way.”
South Korea
South Korea’s unemployment rate fell to the lowest level in nine months as transport and telecommunications companies and banks hired more workers, a further sign the nation’s economy is recovering. The Kospi index rose 0.8 percent, while the won approached a 13-month high.
China’s Shanghai Composite retreated 0.1 percent to 3,175.19, dropping for the first time in nine days as a slowdown in the nation’s lending growth sent banks and developers lower. New loans declined to 253 billion yuan ($37 billion) last month from 516.7 billion yuan in September, the People’s Bank of China reported today, less than 370 billion yuan predicted by economists in a Bloomberg News survey.
The Shanghai gauge increased as much as 0.3 percent earlier after the China’s industrial production rose 16.1 percent from a year earlier in October, the most since March 2008. Retail sales gained an annual 16.2 percent last month.
‘Monetary Tightening’
“It’s probably the start of the monetary tightening,” said Zhao Zifeng, who helps oversee about $10.2 billion at China International Fund Management Co. in Shanghai. “Optimism about the economy is already priced in.”
Japan and China’s economic data also drove Asian currencies higher, raising optimism the region’s growth will spur demand for higher-yielding assets. The dollar traded near a 15-month low against the currencies of six major U.S. trading counterparts.
The Japanese yen strengthened for a second day against the dollar as the nation’s machine orders added to evidence the economic recovery is gathering momentum.
“The data were a surprise,” said Koji Fukaya, a senior currency strategist in Tokyo at Deutsche Bank AG. “Improving risk appetite may weigh down on the dollar.”
The yen rose to as high as 89.29 per dollar in Tokyo, the strongest since Nov. 2. The won climbed 0.4 percent to 1,157.95, according to Seoul Money Brokerage Services, while the Philippine peso advanced as much as 0.4 percent to 46.712 and last traded at 46.870.
HSBC
Daikin Industries Ltd., the world’s No. 2 air conditioner maker, jumped 2.5 percent after lifting its annual profit forecast due to an improved outlook for sales in China.
HSBC, Europe’s biggest bank, rallied 5.6 percent to HK$93.65, after it said third-quarter pretax profit was “significantly” higher than a year earlier.
“Most of the markets have done better than what we expected,” Asia-Pacific Chief Executive Officer Sandy Flockhart said in an interview with Bloomberg Television in Hong Kong today. “Our businesses in Asia, Middle East and Latin America have performed well while the impairment situation in the U.S. is getting better.”
NTT rallied 4.5 percent to 3,750 yen after the stock was added to Goldman Sachs Group Inc.’s “conviction buy” list as the company is likely to buy back shares from the government amid improving profitability. Yakult Honsha Co., a health drink maker, surged 5.8 percent to 2,555 yen after Nomura Holdings Inc. boosted the shares to “neutral” from “reduce,” citing growth in the Chinese market.
To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net.
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