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Asia Stocks Gain as Japan Catches Global Rebound: Markets Wrap

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Asian stocks rose as Japanese equities joined the global rally following a holiday on Monday, amid signs markets are beginning to stabilize after the biggest weekly rout in two years.

Shares advanced from Tokyo to Sydney and S&P 500 Index futures were little changed after the gauge posted its biggest two-day advance in 18 months. The 10-year Treasury yield was steady after falling back from touching 2.89 percent, and the dollar remained under pressure. South Africa’s rand dropped as President Jacob Zuma was said to refuse calls to step down. West Texas Intermediate oil remained under $60 a barrel.

The Cboe Volatility Index fell, but traders were still on edge following the tumultuous moves last week that wiped $2 trillion from U.S. stocks.

Still, some investors are waiting for another dip in the markets before stepping back in. AMP Capital Investors’ Nader Naeimi — who in September had about 30 percent of holdings in cash — said this is a short-term recovery and there will be another leg down in equities going into the Federal Reserve’s March policy meeting.

“The plan is to buy on the second leg down,” Naeimi, Head of Dynamic Markets in Sydney, told Bloomberg TV. “Usually it’s best to wait for the market to build a base before committing heavily back into buying.”

The S&P 500 retook its 100-day moving average, a technical indicator that it crashed through last week. Morgan Stanley chief U.S. equity strategist Michael Wilson reversed his week-old cautious call, joining peers at Goldman Sachs Group Inc. and JPMorgan Chase & Co. who have told clients to buy the dip.

With investors questioning the outlook for monetary policy, billionaire hedge fund manager Ray Dalio said the risks of a recession in the next 18 to 24 months are rising and that bonds are past their peak. Dalio said the U.S. is further along in the business cycle than he thought and that it’s difficult to make a call on equities.

Terminal users can read more in our markets blog.

Here are some important things to watch out for this week:

  • Lunar new year celebrations for the Year of the Dog begin, affecting China, Hong Kong, Taiwan, Singapore, Malaysia and Indonesia. Chinese mainland markets are closed Feb. 15-21. India is out Tuesday for a public holiday.
  • The U.S. consumer-price index, due Wednesday, probably increased at a moderate pace in January, economists project. Retail sales in the U.S., also out Wednesday, probably increased for a fifth straight month.
  • Japan is expected to extend the longest stretch of economic growth since the mid-1990s when it reports fourth-quarter gross domestic product on Wednesday.
  • Earnings season continues in full swing with reports from Bunge, TripAdvisor, SunPower, Con Edison, Bombardier, PepsiCo, MetLife, Cisco, Japan Post Bank, Credit Suisse, Nestle, Airbus, Allianz, Telstra and Coca-Cola.

These are the main moves in markets:

Stocks

  • The MSCI Asia Pacific Index gained 1.1 percent as of 11:29 a.m. Tokyo time.
  • Topix index rose 0.8 percent.
  • Hong Kong’s Hang Seng Index climbed 2.1 percent.
  • Kospi index gained 1.2 percent.
  • Australia’s S&P/ASX 200 Index rose 0.6 percent.
  • Futures on the S&P 500 Index rose 0.1 percent.

Currencies

  • The Bloomberg Dollar Spot Index fell less than 0.05 percent.
  • The Japanese yen fell less than 0.05 percent to 108.71 per dollar.
  • The euro fell less than 0.05 percent to $1.2289.

Bonds

  • The yield on 10-year Treasuries fell less than one basis point to 2.86 percent.
  • Japan’s 10-year yield rose less than one basis point to 0.071 percent.

Commodities

  • West Texas Intermediate crude advanced 0.7 percent to $59.69 a barrel.
  • Gold fell less than 0.05 percent to $1,322.60 an ounce.
  • LME copper rose 1 percent to $6,900.00 per metric ton.

    Read more: http://www.bloomberg.com/

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