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Hong Kong - Asian stocks reversed losses and zinc climbed after reports indicated an unexpected pickup in Chinese manufacturing. Australia’s dollar gained and the yen weakened following central bank meetings.
The MSCI Asia Pacific Index recovered from a drop of as much as 0.3% as official and private purchasing managers’ indexes for China rose to two-year highs and topped the most optimistic estimates.
The Aussie strengthened versus all of its peers after the Reserve Bank of Australia refrained from cutting interest rates and the yen weakened as the Bank of Japan (BOJ) also left policy unchanged.
Zinc surged to a fresh five-year high in Shanghai, while crude oil steadied after tumbling on Monday by the most in a month.
The Chinese data "indicates the economy has swung back into expansionary territory for a third consecutive month and shows further stabilisation of Asia’s largest economy," said Margaret Yang, an analyst at CMC Markets in Singapore. "This will improve market sentiment."
Global equities lost ground in October for the first month since June as investors weighed a mixed batch of corporate earnings amid signs monetary authorities in the world’s largest economies are starting to turn away from ultra-loose policies. While the Federal Reserve is forecast to leave interest rates unchanged at a review this week, futures traders see a 71% chance of a hike before the year is out and the November 8 presidential election in the US is giving further cause for caution.
Stocks
The MSCI Asia Pacific Index was up 0.2% as of 11:31 Tokyo time. Hong Kong’s Hang Seng Index and the Shanghai Composite Index both rose for the first time in at least a week.
China’s official manufacturing purchasing managers’ index as well as a private measure both climbed to 51.2 for October, above the 50 threshold that marks the dividing line between expansion and contraction.
"The market has turned more positive and confident that China’s economy will stabilise in the fourth quarter," said Linus Yip, a Hong Kong-based strategist at First Shanghai Securities.
"After a correction in Hong Kong and being at a relatively low level, the market needed some stimulus to gain power and the China figures helped trigger that."
Japan’s Topix index erased earlier declines, hovering near its highest close since April. Sony Corporation dropped as much as 2.45 after the company cut its annual operating profit forecast by 10% on Monday.
Panasonic Corporation slid by the most since June after slashing its projection by 21%.
Futures on the S&P 500 Index added 0.4%, after the US benchmark capped its biggest monthly loss since January.
Currencies
The Aussie strengthened 0.5%. Twenty-two of 28 economists surveyed by Bloomberg forecast the RBA would stay on hold, with the other six forecasting a quarter-point reduction in the cash-rate target to 1.25%.
The yen weakened less than 0.1% after the BOJ kept its monetary policy stance unchanged, as forecast by the vast majority of economists in a Bloomberg survey, and pushed back the projected timing for reaching its 2% inflation goal to the fiscal year starting April 2018.
The central bank re-set its monetary program in September to target yields on Japanese government bonds following a comprehensive policy review.
"It looks as though the least anticipated BOJ meeting of the year will quite rightly produce the least market impact," said Sean Callow, a senior strategist at Westpac Banking Corporation in Sydney.
"Six weeks after taking the big step to target JGB yields is not the time to make yet another change, but extending the likely time to reach 2% inflation is at least admitting reality."
New Zealand’s dollar rose 0.2% and South Korea’s won added 0.3%, pacing gains among currencies of nations that count China as their biggest export market.
The Bloomberg Dollar Spot Index stayed near its highest level since March after US data on Monday showed US consumer purchases rose in September by the most in three months as incomes grew, bolstering the case for the Fed to raise interest rates.
