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Hong Kong - Asian stocks rose with European equity index futures as positive earnings reports from some of the world’s biggest companies countered concern the global economy is losing steam. Turkey’s lira and the yuan strengthened, while industrial metals retreated.
The MSCI Asia Pacific Index advanced to a three-month high as gains in telecom shares offset declines among raw-materials producers. A gauge of Hong Kong shares was poised to enter a bull market as the yuan had its biggest intra-day jump in more than a month.
The Bloomberg Dollar Spot Index held near a six-week high, supported by rising odds of a US interest-rate increase. The lira climbed from near a record low before the country’s president makes an announcement in the wake of a failed coup attempt. Oil held near a two-month low as copper dropped with nickel.
A three-week run that’s boosted the combined worth of global shares by more than $4.5trn has pushed valuations to the highest level in 11 months. Investors are assessing corporate earnings amid concern sluggish global growth will persist after the International Monetary Fund scrapped its forecast for a pickup in the pace of expansion this year.
Goldman Sachs and Microsoft on Tuesday announced quarterly profits that surpassed analysts’ estimates, something achieved by 77% of the S&P 500 members to have reported so far.
“The rally is losing some momentum as the reporting season heats up,” said Niv Dagan, executive director at Peak Asset Management in Melbourne. “We’re staying cautious and taking a little bit of profit off the table. With the equity rebound stalling, we are really looking for positive momentum from the reporting season” for the next leg up in stocks, he said.
Morgan Stanley, Intel and American Express are among US companies announcing results on Wednesday. Gauges of eurozone consumer confidence and UK unemployment are also due, and Brazil’s central bank is expected to leave its benchmark interest rate unchanged at a monetary policy review.
Stocks
The MSCI Asia Pacific Index gained 0.2% as of 08:18, after earlier falling as much as 0.4%. A measure of telecom stocks rose 0.9% and a gauge of raw-materials companies declined 1%. The MSCI Hong Kong Index rose 0.9% and has now rebounded more than 20% from a three-year low recorded in January.
BHP Billiton dropped 2.9% in Sydney after the world’s biggest mining company said iron-ore production fell 7% from a year earlier during the last quarter. Cimic tumbled 19%, the most in 12 years, after reporting a 31% slide in first-half revenue. Nintendo fell 13%, after more than doubling in the two weeks through Tuesday as its Pokemon Go mobile game proved an instant hit.
Futures on the Euro Stoxx 50 Index gained 0.5% as companies including Electrolux AB and SAP reported profits that topped analysts’ estimates.
Contracts on the S&P 500 Index were little changed after the US gauge slipped from an all-time high in the last session. The Dow Jones Industrial Average advanced for an eighth day, its longest rally in three years, and Microsoft rallied in after-hours trading following the release of its results.
Currencies
The lira was 0.6% stronger at 3.0237 per dollar, after earlier sinking as much as 0.7% to 3.0623, within 0.5% of the all-time low reached in September. The currency has tumbled almost 5% since a failed coup attempt on Friday as authorities purged state institutions, the central bank lowered interest rates and and Moody’s Investors Service said it may lower the country’s credit rating to junk.
President Recep Tayyip Erdogan is due to make an announcement on Wednesday that an official said would boost social cohesion and Turkey’s democratic credentials.
The Bloomberg Dollar Spot Index was little changed, after advancing 0.5% in the last session as a report showed new-home construction in the US rose more than economists forecast in June.
A Citigroup gauge that tracks the degree to which American data are exceeding projections is at an 18-month high and futures put the chance of a Federal Reserve rate increase this year at 43%, up from 9% at the start of this month.
“The market will recalibrate on Fed rate-hike expectations to price in at least one” this year, said Charlie Lay, a foreign-exchange strategist in Singapore at Commerzbank AG. “That should support the dollar.”
South Korea’s won weakened 0.4% versus the dollar, the biggest loss among 16 major currencies, while the rand rose 0.4%.
The yuan jumped as much as 0.28% to 6.6780 per dollar amid speculation China’s central bank is trying to prevent the currency from weakening beyond 6.70, a threshold that was breached this week for the first time since 2010. The People’s Bank of China raised its daily reference rate for its currency on Wednesday, even after the greenback strengthened overnight.
Commodities
Crude oil rose 0.1% to $44.70 a barrel in New York, after sliding 2.8% over the last two trading days. While government data Wednesday is forecast to show supplies fell for a ninth week, stockpiles will still be more than 100 million barrels above the five-year seasonal average.
Nickel dropped as much as 1.7% in London, retreating from its highest close since October. Zinc slid from a 14-month high and copper lost 0.7%. China, the world’s top producer of refined copper, released data showing it boosted output by 7.6% in the first half and Barclays forecast there will be a worldwide surplus of the metal every year until 2020.
Bonds
US Treasuries due in a decade were little changed, yielding 1.55%. Similar-maturity sovereign debt in Japan yielded minus 0.24%, down one basis point from the last session.
