Asian stocks rose for a second day after improving U.S. consumer confidence and home-price data bolstered optimism in the world’s largest economy. The Australian dollar weakened and the yen strengthened.
The MSCI Asia Pacific Index added 0.2 percent by 11:33 a.m. in Tokyo. Japan’s Topix Index advanced 1 percent. Standard & Poor’s 500 Index futures were little changed. The Aussie dropped against all its major peers and touched 95.47 U.S. cents, its lowest level since October 2011. The 10-year yield on Australian bonds rose 8 basis points to 3.41 percent, heading for its highest close in almost two months. The yen rose 0.2 percent to 102.17 per dollar after tumbling 1.4 percent yesterday.
The Conference Board’s index of consumer sentiment climbed more than forecast to its strongest level in more than five years, while the S&P/Case-Shiller index of property values in 20 cities jumped 10.9 percent in the 12 months through March, the most since April 2006. Pacific Investment Management Co. sees Australia’s central bank cutting borrowing costs further as falling mining investment may leave an economic hole.
“An improving U.S. economy should support earnings and valuations,” said Johannes Jooste, who helps oversee more than $1.76 trillion as a market strategist at Merrill Lynch Wealth Management in London.
Utilities and health-care companies led gains on MSCI’s Asian index, which lost 3.3 percent this month. Taiwan’s Taiex Index gained 0.8 percent, South Korea’s Kospi Index climbed 0.4 percent. Hong Kong’s Hang Seng Index slumped 0.8 percent.
The S&P 500 index rose 0.6 percent yesterday, bringing its advance in May to 3.9 percent, a seventh month of gains. That’s the longest winning streak since September 2009.
Yield Differential
Australia’s dollar fell to the lowest since 2011 versus its U.S. peer after the 10-year yield spread between the two countries’ debt narrowed to the least in more than four years on signs the American economy is improving.
“The diminishing yield differential is one argument for the Aussie’s move lower,” said Michael Turner, a debt strategist at Royal Bank of Canada in Sydney. “There certainly seems to be some downside risk to growth in Australia. The risk is skewed for more easing.”
Australia’s 10-year bond yield touched 3.44 percent, the highest since April 3. The U.S. Treasury 10-year yield reached 2.18 percent yesterday, a level unseen since April 2012. The spread between them narrowed to the least since November 2008.
The yen’s advance pared its monthly decline versus the U.S. currency to 4.9 percent. That would be an eighth month of declines. The Dollar Index has rallied 3.1 percent in May, headed for its biggest advance since February, as the greenback gained against all 16 major peers.
Source: Bloomberg
