Asian Stocks Advance on Speculation U.S. Fed Will Act to Stimulate Growth

Asian stocks rose on speculation the U.S. Federal Reserve will join the region’s central banks in further stimulating economic growth, supporting a fragile global economic recovery.

BHP Billiton Ltd., the world’s biggest mining company, gained 0.7 percent as oil and metal prices rallied. Korea Zinc Co., which produces gold and silver, advanced 1.9 percent in Seoul. Yanzhou Coal Mining Co. jumped 10 percent in Shanghai. Fortescue Metals Group Ltd., Australia’s third-largest iron-ore exporter, surged 5.7 percent in Sydney after securing bank funding.

“Further quantitative easing will hopefully stimulate economic activity to where the recovery is self-sustaining,” said Tim Schroeders, who helps manage about $1 billion at Pengana Capital Ltd. in Melbourne. “That would bolster the outlook for jobs creation, higher consumption and earnings growth, and give a positive impetus to equity valuations.”

The MSCI Asia Pacific excluding Japan Index gained 0.4 percent to 460.45 at 12:38 p.m. in Sydney after a larger-than- estimated cut in U.S. jobs stoked optimism the Fed will intensify action to bolster the economy. The gauge advanced 2 percent last week after Japan’s central bank cut its benchmark interest rate and Australia unexpectedly kept its key rate unchanged.

Material Stocks

Material stocks were the biggest drivers of the MSCI Asia Pacific ex-Japan gauge’s advance. The index has rallied 29 percent from this year’s May 25 low amid signs a U.S. recovery is regaining momentum and that China’s economic expansion will continue.

The S&P/ASX 200 Index gained 0.6 percent as a statistics bureau report showed Australian home-loan approvals rose in August from a month earlier. South Korea’s Kospi index rose 0.2 percent, while New Zealand’s NZX 50 Index added 0.1 percent. Japanese markets are closed for a public holiday.

Futures on the U.S. Standard & Poor’s 500 Index increased 0.2 percent. The gauge climbed 0.6 percent to 1,165.15 in New York on Oct. 8 as the jobs report fueled speculation the Fed would do more to ensure a lasting recovery.

“Further quantitative easing will boost short-term liquidity, which should find its way into financial markets,” said Prasad Patkar, who helps manage about $1.8 billion at Platypus Asset Management in Sydney. “It should also support broader economic activity in the longer term. The rising supply of dollars in the system will increase demand for hard assets like commodities and precious metals as a store of value.”

U.S. Employment

U.S. employers cut 95,000 jobs in September, Labor Department figures showed. The median estimate of economists surveyed by Bloomberg News was for a 5,000 drop. The dollar fell below 82 yen for the first time since 1995, while the Reuters/Jefferies CRB Index of 19 raw materials climbed to the highest level in almost two years.

Copper futures for December delivery rose 2.6 percent to a 27-month high on Oct. 8 in New York, while gold futures for December delivery gained 0.8 percent to settle at $1,345.30. Crude oil for November delivery advanced 1.2 percent to settle at $82.66 a barrel on the New York Mercantile Exchange.

“The U.S. jobs data was basically a win-win for equities,” said Chris Weston, a Melbourne-based institutional dealer at IG Markets. “If it was better, we’d have seen a rally in risk, but as we saw a worse-than-expected number, it again heightened the need for stimulus. Fed liquidity into markets helps inflate asset prices, providing a solid platform for equities to rally in the short term.”

The MSCI Asia Pacific ex-Japan Index has risen 11 percent this year on speculation growth in corporate profits will weather Europe’s debt crisis, Chinese steps to curb property- price inflation and concern about the pace of the U.S. economic rebound. Stocks in the gauge trade at 13.8 times estimated profit on average, compared with 13.9 times for the S&P 500 and 12.1 times for the Stoxx Europe 600 Index.