Australian Stocks Power Ahead, Leading Asia-Pacific Market Gains

Nikkei up as yen weakens; holiday in China, Hong Kong, South Korea

Asian-Pacific equities were mostly higher Monday, benefiting from broadly upbeat sentiment and gains in the U.S. dollar, though several major markets in the region were shut for holidays.

Australia’s S&P/ASX 200 led gains, rising 0.9% as the Australian dollar fell 0.2% against the U.S. dollar, helping support export stocks. Among heavyweight export-focused stocks, Rio Tinto (>> Rio Tinto plc) surged 2.2%, while Fortescue Metals (>> Fortescue Metals Group Limited) added 2% and BHP Billiton (>> BHP Billiton Limited) was up 1.5%.

Elsewhere, Japan’s Nikkei Stock Average was up 0.2%, thanks in part to the yen falling 0.3% against the dollar, while Singapore’s FTSE Straits Times Index gained 0.7% and Taiwan’s Taiex rose 0.8%. The gains were in line with analysts’ bullish expectations for the fourth quarter amid ample market liquidity.

“Market sentiment has been positive for a reasonable amount of time and markets are moving on economic outlook and earnings growth,” said Adrian Vance, an investment adviser at Forsyth Barr in New Zealand.

The region’s stock markets were also lifted by a robust reading of industrial activity in China issued over the weekend. The nation’s September official manufacturing purchasing managers index increased to 52.4 from 51.7 in August, hitting its highest level since May 2012 on a surge in new orders.

However, stock trading activity across the region will likely remain muted, with markets in China and South Korea shut all week. Hong Kong and India were closed for holidays Monday and a number of states in Australia were also closed Monday.

Bucking the region’s gains, Malaysia’s benchmark index was down 0.2%, hurt by foreign fund outflows. If the index closes lower on Monday, it would be 10th straight session of declines. In New Zealand, the NZX50 was off 0.1%, after closing at fresh record highs for several sessions last week.

Meanwhile, China’s market closures this week could also damp trading in commodity markets and pressure prices, as market participants expect limited demand over the weeklong holiday

In energy trade, oil prices were slightly weaker at the start of a new quarter, extending the lackluster U.S. performance on Friday after the latest monthly data showed an increase in U.S. oil output in July from June.

Some investors were concerned that U.S. producers have been increasing output and possibly ramping up even more quickly, to take advantage of recently higher prices, and the increased supply could limit oil’s potential to move higher. Nymex crude was last down 0.4% while Brent futures fell 0.5%.

Among precious metals, gold prices were last down 0.6%, as investors’ risk appetite broadly improved. Jeffrey Halley, senior market analyst at Oanda, said gold prices fell as the bearish bias from Friday has continued, while physical buying was expected to be muted for this week.

Source: Dow Jones