Asia Stocks, Currencies Rise to 2-Year High; Aussie Nears Parity

By Will McSheehy and Shani Raja
Oct. 14 (Bloomberg) -- Asian stocks and currencies rose to two-year highs while commodities gained amid expectations of stronger regional growth. Australia’s currency neared parity with the U.S. dollar as investor appetite for risk increased.
The MSCI Asia Pacific Index advanced 2 percent to 132.19 as of 4 p.m. in Tokyo, the highest since July 2008. The Stoxx Europe 600 grew 0.3 percent to 266.93. Futures for the Standard & Poor’s 500 stock index climbed 0.4 percent. The Bloomberg- JPMorgan Asia Dollar Index, which tracks the region’s 10 most- traded currencies excluding the yen, rose 0.3 percent heading for its best close since April 2008. Australia’s dollar, Singapore’s dollar and gold reached records.
Investors viewed a record increase in China’s foreign-currency reserves as a sign that global demand remains resilient. Emerging-market currencies may rise against the dollar as consumers in those nations surpass U.S. household spending as a major driver of world growth, according to commentary on Pacific Investment Management Co.’s website.
“Asian markets are attractive because investors are increasingly looking to faster-growing economies that are less reliant on policy stimulus in order to achieve adequate rates of return,” said Tim Schroeders, who helps manage about $1 billion at Pengana Capital Ltd. in Melbourne. “The positive tone of recent economic and earnings data is generating a growing momentum of confidence.”
Japan’s Nikkei 225 Stock Average advanced 1.9 percent, Australia’s S&P/ASX 200 Index gained 1.7 percent and New Zealand’s NZX 50 Index gained 1 percent.

China Optimism

The Shanghai Composite Index rose 0.7 percent, a sixth day of gains, as signs the Chinese economy is gaining strength spurred companies to boost profit estimates. Huaxia Bank Co., part-owned by Deutsche Bank AG, jumped 1.5 percent after it said nine-month net income may increase more than 50 percent.
China’s foreign-exchange reserves increased by a record to
$2.65 trillion at the end of last month while a 25 percent jump in exports lifted its trade surplus to $16.9 billion, reinforcing optimism the country will continue to lead the global recovery.
BHP Billiton Ltd., the world’s largest mining company and Australia’s biggest oil producer, advanced 2.1 percent in Sydney as oil and metal prices gained, while Rio Tinto Ltd. surged 4.6 percent. Canon Inc., which gets 80 percent of sales abroad, gained 1.7 percent. Toyota Motor Corp., with more than 70 percent of sales overseas, increased 3 percent.
Gold for immediate delivery climbed as much as 1 percent to an all-time high of $1,385.45 an ounce. March-delivery rubber futures in Shanghai gained as much as 2.3 percent to 31,370 yuan a metric ton before trading at 31,205 yuan.

Commodity Records

Copper in London and New York climbed to the highest levels in 27 months as a weaker dollar boosted demand for commodities as alternative investments. The metal for three-month delivery on the London Metal Exchange rose as much as 1.5 percent to
$8,483 a metric ton, the highest level since July 2008.
Oil climbed for a second day, rising 1.2 percent to $83.99 a barrel in New York, ahead of an meeting of the Organization of Petroleum Exporting Countries today at which the group is expected to keep production unchanged and urge increased adherence to output quotas.
“The overall feeling is optimistic,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney. “We still see stimulus being talked about from the Fed, and as a result of that we’re seeing all commodities climb.”

Dollar Weakness

The dollar fell to its weakest since January against the euro and reached a 15-year low versus the yen before reports likely to fuel speculation the Fed will ease policy further to support prices. The dollar declined to $1.4094 per euro in Tokyo from $1.3961 in New York yesterday. It fell to 81.20 yen from
81.81 yen.
Singapore signaled it will allow faster appreciation in its currency today after India, Malaysia and Thailand raised interest rates to curb inflation. U.S. inflation through 2012 will fall short of the Federal Reserve’s long-term goal on a slow recovery in growth and employment, according to a Bloomberg News poll of economists.
The island-city’s currency rose 0.7 percent to S$1.2935 per U.S. dollar. It earlier reached S$1.2893, the strongest since
1981 when Bloomberg began compiling the data, and has gained 8.4 percent this year, making it the third-best performing currency in Asia excluding Japan. Today’s advance of as much as 1.06 percent was the biggest since June 21.
China’s yuan advanced to its strongest level since 1993 on speculation policy makers will yield to intensifying international pressure to let the currency appreciate faster.

Stronger Yuan

The central bank set the reference rate at 6.6582 per dollar, the highest level since a peg was dropped in July 2005.
U.S. Senate Finance Committee Chairman Max Baucus said yesterday a bill punishing China over the value of the yuan may well pass in the Senate, with Congress submitting it to President Barack Obama for his signature.
The yuan rose 0.1 percent to 6.6567 per dollar in Shanghai, according to the China Foreign Exchange Trade System. It touched 6.6560, the strongest level since the central bank unified official and market exchange rates at the end of 1993.
Fed Chairman Ben S. Bernanke will speak tomorrow on monetary policy objectives and tools in Boston. He said on Oct.
4 that the central bank’s first round of large-scale asset purchases aided the economy and that further quantitative easing is likely to help more.
The Markit iTraxx Asia index of credit-default swaps on 50 investment-grade borrowers outside Japan declined 4 basis points to 96 1/2 basis points. in Hong Kong, according to Credit Agricole CIB prices. That’s the bond risk benchmark’s lowest level since April 21, according to CMA in New York.