Asian stocks rose as crude oil maintained its surge and Samsung Electronics Co. reported better-than-estimated earnings. The dollar extended its rebound versus major peers, while Australia’s currency neared parity with its New Zealand counterpart before an interest-rate review.
The MSCI Asia Pacific Index added 0.3 percent by 10:03 a.m. in Tokyo, rising a fourth day as Samsung, the second-biggest stock in the gauge, climbed to a two-week high. Japan’s Topix and Australia’s benchmark jumped at least 0.9 percent. U.S. equity futures fell 0.1 percent after the Standard & Poor’s 500 Index advanced 0.7 percent Monday. U.S. oil was at $ 51.71 a barrel after soaring the most in two months. The Bloomberg Dollar Spot Index advanced a second day, while the Aussie traded near a record-low to the kiwi.
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Investors from Australia to Europe return from Easter holidays Tuesday to digest last week’s disappointing U.S. payrolls report. In the first comments from the Federal Reserve’s inner core since the data, New York Fed President William Dudley said the pace of rate increases is likely to be “shallow” once tightening starts. While a majority of economists predict Australia will keep rates on hold, swaps traders are pricing in a 77 percent chance of a cut Tuesday.
“Investors appeared to support a slower Fed rate lifting regime, but this enthusiasm could be short lived as the ramifications of a lower recovery sink in,” Michael McCarthy, chief market strategist in Sydney at CMC Markets, wrote in an e-mail to clients. “The risk heading into the RBA’s rate decision this afternoon is looking one-sided. With a cut baked in to current levels, a decision to hold could bring disappointment.”
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Of the 30 economists polled by Bloomberg News, 17 predict the Reserve Bank of Australia will keep the country’s overnight cash rate target at 2.25 percent, while the rest are tipping a reduction of 25 basis points, or 0.25 percentage point. Bets on a rate cut rose from 75 percent on Monday, and 66 percent a week ago, according to a Credit Suisse Group AG index. India also reviews borrowing cost Tuesday.
The S&P/ASX 200 Index added 1.3 percent in Sydney, after a four-day weekend, while New Zealand’s NZX 50 Index gained 0.4 percent. The Aussie was steady at 75.81 U.S. cents after slipping 0.5 percent Monday, and was little changed at NZ$ 1.0076 following a drop of as much as 0.4 percent last session.
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The Kospi index in Seoul climbed 0.3 percent as smartphone giant Samsung advanced for a second day, rising 0.4 percent to the highest level on a closing basis since March 25. The Suwon, Korea-based company’s 5.9 trillion won ($ 5.4 billion) operating income exceeded the 5.5 trillion-won average of 36 analysts’ estimates compiled by Bloomberg. The won dropped 0.5 percent following a four-day advance.
The Bloomberg dollar index, a gauge of the U.S. currency versus 10 major counterparts, rose 0.1 percent after a 0.3 percent gain Monday. The index slid as much as 1.1 percent in the wake of the payrolls report Friday. The yen was steady at 119.58 per dollar, while the euro traded at $ 1.0935. Yields on 10-year Treasury notes added one basis point to 1.90 percent after jumping six basis points on Monday.
The timing of the first U.S. rate increase since 2006 “will be data dependent and remains uncertain because the future evolution of the economy cannot be fully anticipated,” Dudley said Monday in New Jersey. “It will be important to monitor developments to determine whether the softness in the March labor market report evident on Friday foreshadows a more substantial slowing in the labor market than I currently anticipate.”
A report Monday showed U.S. service industries grew in March at about the same pace as in February, indicating the biggest part of the U.S. economy is holding up. The Institute for Supply Management’s non-manufacturing index dropped to 56.5 from the prior month’s 56.9 reading, the Tempe, Arizona-based group said. Levels above 50 indicate expansion and the March reading matched the median estimate in a Bloomberg survey of economists.
Economic reports have lagged behind analysts’ forecasts since early January, with the Bloomberg Eco U.S. Surprise Index falling to its weakest reading since 2009 last month. Minutes of the Fed’s latest meeting, after which it noted that “growth has moderated somewhat,” are due for release Wednesday.
Earnings season also gets under way this week in the U.S., with Alcoa Inc. releasing results. Analysts predict profits for S&P 500 companies fell 5.8 percent in the first quarter as earnings were buffeted by tumbling oil prices and a stronger dollar. Investors may face the longest stretch of declines since the financial crisis, with slumps of 4.2 percent and 1 percent over the second and third quarters, the estimates show.
West Texas Intermediate crude fell 0.8 percent after soaring 6.1 percent Monday, the biggest one-day gain since Feb. 3. Brent oil was also down 0.8 percent, to $ 57.64 a barrel following a 5.8 percent surge Monday.
State-owned Saudi Arabian Oil Co. narrowed the discount for its Arab Light grade exported to Asia to the least since December. The price was set at a discount of 60 cents a barrel to the regional benchmark, the company said in an e-mailed statement, with the May pricing 30 cents higher than in April. The value of all U.S. imports from Saudi Arabia plunged 61 percent in the first two months of 2015, according to data last week.
Nickel for three-month delivery on the London Metal Exchange climbed a third day, rising to $ 13,140 a dry metric ton, while copper gained 0.4 percent. Gold, regarded as a haven investment, dropped 0.2 percent to $ 1,212.70 an ounce following a 1 percent jump on Monday amid speculation over the timeline for higher U.S. rates.
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