Asian Stocks Advance as Economic, Earnings Reports Boost Recovery Optimism

Asian stocks rose, sending the regional equity benchmark index to its highest level since July 2008, as strengthening economic and corporate earnings data boosted confidence in a global recovery.

BHP Billiton Ltd., the world’s largest mining company and Australia’s biggest oil producer, advanced 2.1 percent in Sydney as oil and metal prices gained, while rival Rio Tinto Group surged 4.4 percent. Toyota Motor Corp., a carmaker that gets more than 70 percent of its sales overseas, increased 3 percent. Yahoo Japan Corp., operator of Japan’s most-visited Internet portal, jumped 6.4 percent amid speculation AOL Inc. is among companies exploring a deal for part-owner Yahoo! Inc.

The MSCI Asia Pacific Index advanced 1.9 percent, the most since June 21, to 132.10 as of 7:31 p.m. in Tokyo, with all 10 industry groups rising, led by materials companies. More than seven stocks climbed for every two that fell on the nearly 1,000-member gauge as investors viewed U.S. profit reports and a record climb in China’s foreign-currency reserves as adding to signs that global demand will pick up.

“The positive tone of recent economic and earnings releases is generating a growing momentum of confidence,” said Tim Schroeders, who helps manage about $1 billion at Pengana Capital Ltd. in Melbourne. “Asian markets are attractive because investors are increasingly looking to faster-growing economies that are less reliant on policy stimulus to achieve adequate rates of return.”

The MSCI Asia Pacific Index has climbed 4.6 percent this month on speculation central banks in developed countries will increase efforts to boost economic growth after Japan last week cut its benchmark interest rate and Australia unexpectedly kept its key rate unchanged.

Riskier Assets

The S&P/ASX 200 Index increased 1.7 percent, with Australia’s currency nearing parity with the U.S. dollar as investor appetite for riskier assets rose. Japan’s Nikkei 225 Stock Average advanced 1.9 percent today. Hong Kong’s Hang Seng Index climbed 1.7 percent.

Futures on the Standard & Poor’s 500 Index rose 0.5 point, or less than 0.1 percent. The contract has risen for eight days in a row, the longest winning streak since March.

The S&P 500 rose 0.7 percent yesterday in New York to the highest close since May 3. CSX Corp., the second-largest publicly traded U.S. railroad, reported profit that exceeded analysts’ estimates, and China said its foreign-exchange reserves increased by a record to $2.65 trillion at the end of September.

Profit Growth

JPMorgan Chase & Co. and Intel Corp. reported third-quarter profit that topped the average analyst estimates. Eighteen companies in the S&P 500 are scheduled to release third-quarter results this week. Analysts surveyed by Bloomberg predict 23 percent profit growth from a year earlier for companies in the index, the fourth straight quarterly increase after a record nine-quarter slump.

“The strong momentum is mainly due to the earnings results in the U.S.,” said Castor Pang, Hong Kong-based research director at Cinda International Holdings Ltd. “It helps the overall stock market to have a high valuation.”

Crude oil for November delivery advanced 1.6 percent to settle at $83.01 a barrel yesterday in New York, the highest level since Oct. 6. The London Metal Exchange Index of six metals including aluminum and copper climbed 0.3 percent yesterday to the highest close since July 2008. The Baltic Dry Index of shipping rates for commodities rose for a second consecutive day.

‘Sentiment Recovering’

BHP Billiton, also Australia’s largest oil producer, advanced 2.1 percent to A$41.66 in Sydney. Rio Tinto surged 4.4 percent to A$82.08.

Fortescue Metals Group Ltd., Australia’s third-biggest producer of iron ore, climbed 1.3 percent to A$6.38 as first- quarter shipments rose a better-than-expected 6 percent on higher production.

Mitsubishi Corp., a commodities trading house, gained 3.1 percent to 2,111 yen in Tokyo, while Cnooc Ltd., China’s biggest explorer for offshore oil and gas, rose 4.4 percent to HK$16.72 in Hong Kong. Jiangxi Copper Co., China’s No. 1 producer of the metal, advanced 5.2 percent to 42.82 yuan in Shanghai.

“China, which is a major source of demand, is unexpectedly good,” said Mitsushige Akino, who oversees about $450 million in assets in Tokyo at Ichiyoshi Investment Management Co. “Global economic sentiment is moderately recovering and excessive pessimism is receding.”

The MSCI Asia Pacific Index rose 0.7 percent yesterday, the biggest gain in a week, as reports from China and Japan also indicated the economic recovery is strengthening.

Asian Markets

Japanese machinery orders rose 10.1 percent from July, the Cabinet Office said yesterday in Tokyo, where the median forecast of 28 economists surveyed by Bloomberg News was for a decline. Exports in China, the world’s fastest-growing major economy, rose 25.1 percent from a year earlier, the customs bureau said yesterday on its website.

“Economic data in Asian markets seem to be still stronger than the U.S. and European countries,” said Cinda’s Pang. “Funds are flowing in from western countries to Asia.”

The Asia-Pacific gauge has advanced 9.7 percent in 2010, compared with gains of 5.7 percent by the S&P 500 and 4.9 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at an average of 14.5 times estimated earnings, compared with 14 times for the S&P and 12.3 times for the Stoxx.

Singapore signaled today, even as its economy shrank, that it would allow faster appreciation in its currency, after India, Malaysia and Thailand raised interest rates to curb inflation.

“The implication is that Singapore is less worried about growth and more worried about upside risks to inflation,” said Robert Prior-Wandesforde, head of Southeast Asian economics at Credit Suisse Group AG in Singapore.

‘China Boosts Demand’

Toyota gained 3 percent to 2,930 yen in Tokyo. Canon Inc., a Japanese camera maker that gets about 80 percent of its sales abroad, gained 1.7 percent to 3,910 yen. In Seoul, LG Electronics Inc., the world’s third-largest mobile-phone maker, advanced for a third day, rising 1.7 percent to 98,600 won.

“China will boost demand globally,” said Koichi Kurose, chief strategist in Tokyo at Resona Bank Ltd., which manages about $57 billion.

Yahoo Japan jumped 6.4 percent to 30,600 yen. Yahoo! Inc. is working with Goldman Sachs Group Inc. to help defend against possible takeover approaches, said three people familiar with the matter. The company doesn’t have an offer in hand, they said.

The Wall Street Journal earlier reported that AOL and several private-equity investors are exploring a deal for Yahoo! Inc., which owns 35 percent of Yahoo Japan, according to data compiled by Bloomberg.