(Bloomberg) — Japanese shares climbed to a seven-year high and the yen strengthened as the country exited a recession. New Zealand's dollar advanced after retail sales rose, while Malaysia's ringgit gained for a second day.
The Topix index advanced 0.9 percent by 11:02 a.m. in Tokyo, sending the MSCI Asia Pacific Index to a gain of 0.4 percent. Standard & Poor's 500 Index futures dropped 0.2 percent after the U.S. gauge reached a record Friday. The yen strengthened 0.2 percent and the yield on 10-year Japanese bonds climbed two basis points. The kiwi added 0.6 percent after retail-sales growth accelerated. Brent crude held gains above $ 60 a barrel and the ringgit appreciated 0.4 percent.
While Japan's expansion last quarter trailed economist estimates, Sumitomo Mitsui Trust Bank said the figures showed Asia's second-largest economy is on the path to recovery. Greece and its creditors continue talks today, while fighting over a contested transport hub threatens to derail the new cease-fire agreement in Ukraine. U.S. markets are closed for a holiday today, with the Federal Reserve set to release minutes of its January meeting on Wednesday.
"Even though it missed estimates, the figures are positive which means at least the direction of the recovery is right," Ayako Sera, a markets strategist at Sumitomo Mitsui Trust Bank in Tokyo, which oversees $ 325 billion in assets, said by phone, referring to Japan's fourth-quarter gross domestic product report. "I would say the data today is mixed. People haven't completely lost hope on growth."
BOJ Concerns
The yen traded at 118.56 per dollar. The currency rallied at the end of last week after people familiar with the matter said some BOJ policy makers view further monetary easing as counterproductive for now. More stimulus could trigger losses in the currency that damage confidence, people familiar with the central bank's discussions said last week.
Japan's nominal GDP, which isn't adjusted for price changes, climbed an annualized 4.5 percent from the previous quarter. Real GDP was flat in 2014, the first time since a 2011 contraction that the economy failed to expand after factoring in inflation. An update on industrial production is also due, with the Bank of Japan set to meet from Tuesday.
Financial stocks drove Monday's gains in the Topix, which was headed for its highest close since December 2007. Yields on 10-year Japanese government bonds climbed a third day, rising to 0.435 percent.
GPIF Selling?
Data indicate Japan's $ 1.1 trillion Government Pension Investment Fund is selling local bonds and buying domestic stocks and overseas assets. Trust banks, which manage retirement money including those of GPIF, sold a net 1.05 trillion yen ($ 8.8 billion) in Japanese notes in December, the first reduction on record dating back to 2004, the Japan Securities Dealers Association says.
The kiwi climbed to 74.99 U.S. cents, rising for a third day as the retail-sales report and a gauge of services beat estimates. The NZX 50 Index lost 0.7 percent as Contact Energy Ltd. tumbled 7.5 percent on a plunge in first-half profit.
Hong Kong's Hang Seng Index climbed 0.2 percent and a gauge of Chinese shares in the city fluctuated after data Friday showed new bank loans in China exceeed estimates in January. The Shanghai Composite Index was little changed.
China Credit
Aggregate financing was 2.05 trillion yuan ($ 328 billion) in January, the People's Bank of China said, matching economists' estimates, while local-currency bank lending doubled from a month earlier. M2 money supply rose 10.8 percent from a year earlier, the slowest pace since at least 1996, according to data compiled by Bloomberg.
The ringgit advanced to 3.5615 per dollar as both Brent and West Texas Intermediate crude held on to gains from the end of last week. Brent, the benchmark for more than half of global oil, traded at $ 61.49 a barrel after soaring 7.8 percent on Friday, while WTI was little changed at $ 52.78 a barrel.
Oil is rallying from its lowest level in almost six years as U.S. drillers cut the number of rigs in services to the fewest since August 2011. Brent is still down more than 45 percent from a high reached in June.
Energy producers were the biggest gainers among 10 industry groups in the S&P 500 Friday, advancing 2 percent as raw-materials companies also climbed. The Dow Jones Industrial Average added 0.3 percent to its highest close this year, while the MSCI All-Country World Index climbed to its strongest level since Nov. 26.
The cease-fire in Ukraine came into force at the weekend, with the government in Kiev and pro-Russian militants accusing each other of violations less than a day into the truce. World leaders urged both sides to adhere to the agreement signed last week in Belarus, with a standoff over the town of Debaltseve — a key transport hub on the road that connects the rebel-held cities of Donetsk and Luhansk — emerging as the biggest threat to the deal.
To contact the reporters on this story: Emma O'Brien in Wellington at eobrien6@bloomberg.net; Anna Kitanaka in Tokyo at akitanaka@bloomberg.net
To contact the editors responsible for this story: Emma O'Brien at eobrien6@bloomberg.net Michael Patterson
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