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Posted on April 20, 2011
A pedestrian speaks on a mobile phone as he walks past Apple Inc.’s Sanlitun store in Beijing. Photographer: Nelson Ching/Bloomberg
Asian stocks rallied, lifting the regional benchmark index to a seven-week high, after Apple Inc. (AAPL) posted better-than-expected profits and as energy shares gained. The Australian dollar and gold climbed to records amid concern higher oil prices will spur inflation.
The MSCI Asia Pacific Index jumped 1.1 percent to 138.39 as of 12:43 p.m. in Tokyo. Standard & Poor’s 500 Index futures rose 0.4 percent. Oil added 0.6 percent in New York, gold gained 0.2 percent and silver climbed to a 31-year high. The Australian and Singapore currencies reached new highs against the U.S. dollar, while the euro advanced to the strongest level in 15 months.
Equities are extending the biggest global rally of the year after Apple said second-quarter profit almost doubled. OCI Co. jumped to a record after South Korea’s biggest polysilicon maker said profit surged, while Chinese banks rallied after Citigroup Inc. forecast higher earnings. Central banks from Thailand to Brazil have raised interest rates this week, while the Federal Reserve is forecast to maintain stimulus amid prospects for a weak recovery in the world’s largest economy.
“U.S. company earnings are clearly helping,” said Lee King Fuei, a Singapore-based money manager at Schroders Plc, which oversaw $307.9 billion as of Dec. 31. “In Asian economies where underlying fundamentals are stronger, inflation can potentially be a problem. Markets are a bit too complacent because there are still inflationary pressures.”
More than two shares climbed for each that fell on MSCI’s Asia Pacific Index. The MSCI World (MXWO) Index rose 0.3 percent, after jumping 2 percent yesterday, the most since Nov. 4. The rally over the previous two days has added $1.1 trillion to global stock market values, according to data compiled by Bloomberg.
South Korea’s Kospi index (KOSPI) gained 1.2 percent, set for a record close. Taiwan’s Taiex index surged 1.7 percent. OCI jumped 12 percent in Seoul. Industrial & Commercial Bank of China (601398) Ltd. added 1.2 percent in Hong Kong, leading Chinese lenders higher after Citigroup said the companies will report an average 29 percent increase in first-quarter profit. Keppel Corp. rose 1.3 percent in Singapore after the world’s largest oil-rig maker increased profit 7.8 percent last quarter.
Samsung Electronics Co. and Hon Hai Precision Industry Co. paced gains among Apple suppliers. Apple rose in extended trading after the maker of iPhones and iPads reported per-share profit of $6.40 a share, beating the average analyst estimate of $5.39 a share in a Bloomberg survey. Qualcomm Inc. (QCOM), the biggest maker of mobile-phone chips, also gained after posting second- quarter profit that topped analyst estimates.
Morgan Stanley and General Electric Co. are among companies scheduled to release quarterly results today. Earnings-per-share exceeded predictions for about 75 percent of the 76 companies in the S&P 500 that reported results since April 11, helping revive investor confidence after S&P cut its rating outlook for U.S. debt on April 18. The S&P 500 rose 1.4 percent yesterday, the biggest advance in a month, while the Dow Jones Industrial Average surged to its highest level since June 2008.
“U.S. companies, especially tech stocks, are doing well, and that’s helping to instill confidence,” said Mitsushige Akino, who oversees about $600 million in assets in Tokyo at Ichiyoshi Investment Management Co. “Investors are looking to take a little bit more risk.”
Energy shares posted the biggest gains in Asia, led by a 4.3 percent jump in Inpex Corp. Crude oil rose 0.5 percent to $111.99 a barrel on the New York Mercantile Exchange, extending a 2.9 percent jump yesterday that was the biggest increase since March 17. Brent crude oil gained 0.3 percent to $124.27 a barrel on the London-based ICE Futures Europe.
Gold for immediate-delivery climbed as much 0.4 percent to a record $1,508.28 an ounce before trading at $1,506.22. Cash silver advanced 1.1 percent to $45.7413 an ounce, set for a seventh day of gains. Palladium increased 1 percent.
The so-called Aussie climbed 0.4 percent to $1.0752 after earlier reaching $1.0772, the strongest since it was freely floated in 1983. A Bureau of Statistics report today showed Australia’s producer prices index rose 1.2 percent in the first quarter, exceeding the median estimate of 14 economists surveyed by Bloomberg News for a 1 percent increase.
Singapore’s dollar rose as much as 0.2 percent to S$1.2359 per U.S. dollar, supported by the central bank’s policy of favoring a strong currency to tame inflation. Thailand’s baht reached 29.90, its best level of 2011, after the central bank raised interest rates yesterday for the sixth time in less than a year. Malaysia’s ringgit reached a 13-year high of 3.0066 on speculation rate increases will resume after consumer prices rose in March at the fastest pace since April 2009.
“The inflation data increases the odds of a rate increase this quarter, while still supportive of growth,” said Suresh Kumar Ramanathan, foreign-exchange strategist at CIMB Investment Bank Bhd. in Kuala Lumpur. “Also, the intervention risk is lowered with most Asian currencies gaining in tandem.”
The dollar traded at $1.4572 per euro from $1.4523 in New York yesterday. It earlier reached $1.4582, the weakest since December 2009. The greenback dropped to 82.22 yen from 82.56 yen. The Dollar Index, which tracks the currency against those of six major trading partners, sank 0.4 percent to the lowest level since August 2008.
A report today is forecast to show U.S. house prices fell for a fourth month, underscoring prospects the Federal Reserve will maintain monetary stimulus even as central banks in Europe and Asia raise interest rates. Home prices in the U.S. fell 0.3 percent in February, the Federal Housing Finance Agency will say today, according to a survey of economists by Bloomberg News.
The cost of protecting Asia-Pacific corporate and sovereign bonds from default declined, with the Markit iTraxx Japan index, falling 1.5 basis points to 126.5 basis points, according to Deutsche Bank AG prices. The Markit iTraxx Australia index and the Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan declined 1 basis point each, according to Credit Agricole CIB.
To contact the reporters on this story: Shiyin Chen in Singapore at email@example.com; Weiyi Lim in Singapore at firstname.lastname@example.org.
To contact the editor responsible for this story: Patrick Chu in Tokyo at email@example.com