Japan Stocks Rally on Weaker Yen; Taiex Retreats After Rate Cut

Japanese shares led gains in Asia as a slide in the yen brightened prospects for the nation’s exporters. Taiwan’s Equities declined for a fourth day after the island’s central bank cut interest rates.

The Topix index climbed 0.7 percent as of 10:17 a.m. Tokyo time, poised for a 1.4 percent weekly advance. South Korea’s benchmark was little changed, while Malaysia’s retreated. The yen weakened for the sixth day in a row, falling 0.3 percent to 113.19 per dollar. The British pound fell 0.2 percent, extending its weekly loss to 2.4 percent, the worst performance among major currencies. The Bloomberg Dollar Spot Index gained 1.2 percent this week, its strongest rally in four months, and the Bloomberg Commodity Index slid 1.9 percent.

After upsetting markets in August and again in early February, the prospect of higher U.S. interest rates is returning to the spotlight, as regional Federal Reserve presidents indicate support for higher rates as soon as economic data warrant. While the Fed’s recent Halving of its projection for this year’s increases spurred stock gains and depressed the dollar, the more bullish tone from officials is now supporting a surge in the greenback that’s hurting the mostly dollar-denominated commodity market.

“The market is seeing a little bit of a pause in momentum,” said Kevin Caron, a Florham Park, New Jersey-based market strategist and portfolio manager who helps oversee $180 billion at Stifel Nicolaus & Co. “Now we’re looking ahead at what drives us beyond what central bank actions have been able to curry so far. We don’t really have a catalyst right now.”

Revised gross domestic product data released Friday confirmed that South Korea’s economic growth rate slipped from a five-year high in the fourth quarter as a surge in property transactions faded in the final three months of 2015. Inflation data in Japan showed consumer prices were unchanged for a second month in February, while Thai trade figures are forecast to show exports dropped for a 14th straight month. Taiwan’s central bank cut its benchmark interest rate late Thursday, a decision forecast by most of the economists in a Bloomberg survey.

Asia-Pacific markets including Australia, Hong Kong, India and Singapore are shut Friday for holidays. Most of Europe and North America will also be closed.

Stocks

Toyota Motor Corp. gained 2.1 percent, buoyed by the weaker yen. Honda Motor Co. rose 2.7 percent and Canon Inc. advanced 1.8 percent.

"The yen at around 110 to the dollar isn’t too bad for exporters," said Mitsuo Shimizu, equity strategist at Japan Asia Securities Group.

Taiwan’s Taiex declined 0.2 percent.

--With assistance from Nao Sano To contact the reporters on this story: James Regan in Hong Kong at jregan19@bloomberg.net, Joseph Ciolli in New York at jciolli@bloomberg.net. To contact the editors responsible for this story: James Regan at jregan19@bloomberg.net, Robin Ganguly

By: James Regan and Joseph Ciolli

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