Asian stocks gain, euro weak­ens on ECB bets

The Pak Banker - - MARKETS/SPORTS -

Asian shares rose for the first time this week, Euro­pean eq­ui­ties fluc­tu­ated and the euro weak­ened be­fore an ex­pected loos­en­ing of mon­e­tary pol­icy by the Euro­pean Cen­tral Bank. New Zealand's bonds jumped af­ter a sur­prise in­ter­est-rate cut.

Ja­panese ex­porters led stock gains in Asia, buoyed by a re­treat in the yen. The Stoxx Europe 600 In­dex and U.S. stock in­dex fu­tures were lit­tle changed, while crude oil re­treated from a three-month high. The won strength­ened against all 31 ma­jor peers af­ter the South Korea's cen­tral bank re­frained from low­er­ing bor­row­ing costs at a re­view, while the euro de­clined for a third day ver­sus the dol­lar. New Zealand's twoyear bond yield tum­bled by the most since 2011 and gold fell for a third day.

"There's very strong ex­pec­ta­tions that we're go­ing to see fur­ther stim­u­lus from the ECB, and the real ques­tion is how strong that stim­u­lus will be," said Chris Green, an Auck­land-based strate­gist at First NZ Cap­i­tal Group Ltd., a bro­ker­age and wealth man­age­ment firm. "We're see­ing a more sup­port­ive en­vi­ron­ment for risk as­sets go­ing for­ward."

The ECB is fore­cast to ease pol­icy via mea­sures in­clud­ing an in­ter­est-rate cut and an ex­pan­sion of its quan­ti­ta­tive eas­ing, ac­cord­ing to econ­o­mists sur­veyed by Bloomberg. That would add to a wave of global mon­e­tary stim­u­lus this year that in­cludes a low­er­ing of Chi­nese lenders' re­serve re­quire­ments and Ja­pan's in­tro­duc­tion of a neg­a­tive in­ter­est rate. The In­ter­na­tional Mon­e­tary Fund said Tues­day that volatile fi­nan­cial mar­kets and low com­mod­ity prices were height­en­ing risks for the global econ­omy.

Traders are rein­ing in bets on mon­e­tary tight­en­ing in the U.S., with Fed funds fu­tures in­di­cat­ing a 4 per­cent chance the Fed­eral Re­serve will in­crease in­ter­est rates at a pol­icy meet­ing next week, down from 10 per­cent at the start of this month. The Bank of Ja­pan will also re­view pol­icy next week and Gov­er­nor Haruhiko Kuroda said Thurs­day there's scope for more eas­ing if needed. Chi­nese in­fla­tion data showed con­sumer prices rose 2.3 per­cent from a year ear­lier in Fe­bru­ary, less than the of­fi­cial 3 per­cent tar­get. The Stoxx Europe 600 In­dex fell less than 0.1 per­cent as of 8:09 a.m. Lon­don time. Linde AG, the re­gion's sec­ond­biggest gas sup­plier, gained 0.5 per­cent af­ter re­port­ing fourth-quar­ter profit. Car­refour SA, France's largest re­tailer, dropped 1 per­cent af­ter the com­pany an­nounced earn­ings that matched an­a­lyst es­ti­mates.

Ger­many's ex­ports de­clined 0.5 per­cent in Jan­uary from the pre­vi­ous month and the trade sur­plus nar­rowed more econ­o­mists fore­cast, ac­cord­ing to fig­ures re­leased on Thurs­day. France re­ported a bet­ter-thanex­pected pickup in in­dus­trial out­put for the same month.

The MSCI Asia Pa­cific In­dex rose 0.4 per­cent. New Zealand's S&P/NZX 50 In­dex ad­vanced 0.8 per­cent to a record, while bench­marks de­clined in China and In­dia. Ja­pan's Topix In­dex gained 1.5 per­cent.

"There are ex­pec­ta­tions for eas­ing in Europe," said Koichi Kurose, Tokyo-based chief mar­ket strate­gist at Res­ona Bank Ltd. "If there's noth­ing, it's go­ing to be a big neg­a­tive sur­prise."

Toy­ota Mo­tor Corp., the world's largest au­tomaker, ral­lied 3 per­cent in Tokyo. Kan­sai Elec­tric Power Co., Ja­pan's sec­ond­largest power util­ity, slid as much as 17 per­cent af­ter a court or­dered it to shut down two nu­clear re­ac­tors due to safety con­cerns. Dae­woo Ship­build­ing & Marine En­gi­neer­ing Co., the world's se­cond-largest ship­builder, climbed more than 5 per­cent in Seoul af­ter fore­cast­ing an op­er­at­ing profit for this quar­ter.

The euro weak­ened 0.3 per­cent to $1.0972. It's dropped al­most 3 per­cent in the past month, mak­ing it the worst per­former among ma­jor cur­ren­cies. Econ­o­mists fore­cast the mon­e­tary au­thor­ity will on Thurs­day cut its de­posit rate from mi­nus 0.3 per­cent and step up a 60 bil­lion-euro ($66 bil­lion) monthly bond-buy­ing pro­gram. The New Zealand dol­lar was lit­tle changed, af­ter slid­ing as much as 0.5 per­cent. The na­tion's cen­tral bank low­ered its bench­mark in­ter­est rate a quar­ter of a per­cent­age point to a record 2.25 per­cent and said fur­ther eas­ing may be needed ow­ing to a wors­en­ing out­look for the global econ­omy. The change was fore­cast by just two of 17 econ­o­mists sur­veyed by Bloomberg.

The won strength­ened 1.1 per­cent ver­sus the dol­lar, trim­ming this year's loss to 2.6 per­cent. The Bank of Korea's de­ci­sion to leave in­ter­est rates un­changed on Thurs­day was fore­cast by 11 of 18 econ­o­mists in a Bloomberg sur­vey. The other seven pre­dicted a quar­ter of a per­cent­age point re­duc­tion.

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