Asian stocks advanced for a sixth day, while the U.S. dollar weakened, amid speculation the Federal Reserve will unveil a bond-buying program today. European stock futures were little changed.
The MSCI Asia Pacific Index (MXAP) added 0.2 percent in London. Futures on the Euro Stoxx 50 Index increased 0.1 percent, while contracts on the Standard & Poor’s 500 Index slipped 0.1 percent. Yields on South Korea’s three-year government bonds rose the most in four weeks after the central bank unexpectedly chose not to cut interest rates. The dollar fell against 13 of its 16 major peers, dropping to as low as 77.65 yen, the weakest since Feb. 14.
The Fed will today announce more bond purchases, according to almost two-thirds of economists in a Bloomberg survey. Two previous rounds of quantitative easing totaling $2.3 trillion failed to revive the labor market, which Fed Chairman Ben S. Bernanke said last month is a “grave concern.”
“Markets are slightly nervous in anticipation of quantitative easing,” Lim Say Boon, chief investment officer at DBS Private Bank, said on Bloomberg Television in Singapore. “If we get QE3 then the markets, beyond this period of nervousness, are likely to rally even further.”
About five stocks rose for every four that fell on the MSCI Asia Pacific Index, which headed for its longest winning streak since July. Trading volumes were lower across Asia, with the number of shares changing hands 15 percent below the 30-day average on Japan’s Nikkei 225 Stock Average, which rose 0.4 percent to lead regional benchmarks.
TDK Corp., a Japanese battery supplier to Apple Inc., climbed 3.7 percent after the iPhone 5 was unveiled. Kansai Electric Power Co. and Kyushu Electric Power Co. advanced more than 9 percent in Tokyo on a Yomiuri newspaper report utilities are considering a rate increase.
Fortescue Metals Group Ltd., Australia’s third biggest iron ore producer, dropped 14 percent, the biggest decline in almost four years. The Australian Financial Review reported it sought a debt covenant waiver from its lenders for the next 12 months.
South Korea’s central bank predicted any pickup in the global economy will be moderate. Massive stimulus would be “detrimental” to China’s long-term growth, the Xinhua News Agency wrote yesterday after Premier Wen Jiabao .
Only one out of 16 economists surveyed by Bloomberg forecast today’s Korean rate decision, while 15 predicted the benchmark would be cut by 25 basis points to 2.75 percent. Germany’s top constitutional court cleared the way for ratification of Europe’s permanent bailout fund yesterday. The Fed concludes its two-day meeting today.
“I had thought the Bank of Korea might take a wait-and-see stance ahead of the Fed meeting today, but I expect a cut next month,” said Yum Sang Hoon, a fixed-income analyst at SK Securities Co. in Seoul.
The yield on the government’s 3.25 percent bonds due June 2015 climbed seven basis points, or 0.07 percentage point, to 2.88 percent. Australian government bonds declined for a second day, with the yield on 10-year notes rising five basis points to 3.22 percent.
The dollar fell 0.2 percent to 77.71 yen, the lowest in seven months. It slid 0.2 percent to $1.2925 per euro from $1.2900 yesterday, when it touched $1.2937, the weakest since May 11. Gains in Europe’s currency were limited after Greece’s Prime Minister Antonis Samaras received the second refusal in four days from coalition partners over plans to reduce spending that are key to receiving international aid.
The New Zealand dollar advanced 0.2 percent against the greenback, trading near the strongest in more than four months, after the nation’s central bank left interest rates unchanged.
“The markets are seeing a good chance that the Fed will announce QE3 today,” Daisaku Ueno, a senior foreign-exchange and fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo, a unit of Japan’s biggest listed bank, said. “That’s lending support to risk currencies like the Aussie and kiwi.”
The cost of insuring corporate and sovereign bonds in the Asia-Pacific region from non-payment fell, according to traders of credit-default swaps. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan declined one basis point to 122 basis points in Hong Kong, Credit Agricole SA prices show. The index is poised for its lowest close since Aug. 2, 2011, CMA prices show.