Nikkei Asia300 Index advances on Fed rate outlook
HONG KONG (NewsRise) -- Asian stocks outside of Japan posted their steepest gains since July after the U.S. Federal Reserve left unchanged its outlook for interest rate increases this year.
The Nikkei Asia300 Index of some of the region's most influential companies climbed 17.92 points, or 1.6%, to 1,158.64. The Fed on Wednesday raised its policy interest rate by 0.25 percentage points, its first hike this year, as expected. The central bank also maintained its projections for two more increases over the remainder of 2017, boosting risk assets globally.
"One can look at the interest rate markets and see that the Fed funds future is not fully pricing in a second hike this year until September," Chris Weston, chief market strategist at IG, wrote in a report. "It really does suggest the Fed hurried this hike through to take advantage of favourable equity and credit market pricing, and whether we now see a hike in June will be down to how credit and equity" as well as economic indicators perform.
Sentiment was also bolstered as early results showed Dutch Prime Minister Mark Rutte's party won the most seats in elections where an opposition party with an anti-immigration and anti-Muslim policy agenda was seen as a strong contender.
The People's Bank of China on Thursday announced a 10-basis point increase in the rates it charges on funds provided in the interbank money markets, a move aimed at mitigating financial-system risks and supporting the yuan. The Hong Kong Monetary Authority also raised borrowing costs in the city, where rates move in tandem with the U.S. because of the local currency's peg to the dollar, by 0.25 percentage points.
The Nikkei Asia300 China index surged 2.3%, while the gauge for Hong Kong added 1.6%. China Unicom Hong Kong jumped 5.2% to a near one-year high after the company cut its capital expenditure for 2017 by 38% in the wake of a 94% plunge in 2016 net profit. China Life Insurance climbed 3.8% and Industrial and Commercial Bank of China (ICBC) gained 2.6% to pace gains by mainland financial companies. Swire Pacific fell 0.8% after posting a drop in 2016 net income.
Energy producers advanced across the region after U.S. oil prices halted a seven-day losing streak overnight and extended their rally into Thursday's trading. CNOOC jumped 3.6% in Hong Kong, Sapurakencana Petroleum gained 4.4% in Kuala Lumpur and PTT Exploration and Production rose 2.8% in Bangkok.
The Nikkei Asia300 country index for Indonesia surged 2.6%, the region's top performer for the day, as Astra International rallied 4.9% and Bank Rakyat Indonesia advanced 3.1%. The nation's central bank left interest rates unchanged, as expected, after the close of the day's stock market trading.
Indexes for South Korea, Taiwan, Malaysia, Thailand and India added at least 1.1%.
-- V. Phani Kumar