TOKYO, Oct 28 — Asian stocks rose, with the benchmark index heading for a second monthly gain, and the Australian dollar strengthened on speculation central banks will maintain stimulus. The ringgit climbed to a four-month high.

The MSCI Asia Pacific Index advanced 1.1 per cent as of 2:12pm in Tokyo. Standard & Poor’s 500 Index futures added 0.4 per cent after the gauge climbed to a record. Japan’s Topix rallied 1.7 per cent. Australia’s S&P/ASX 200 Index rose 1 per cent to the highest level since June 2008 as the nation’s currency gained 0.3 per cent versus the greenback. The ringgit strengthened 0.6 per cent, while copper declined. A gauge of Treasury market volatility fell to a five-month low.

The Federal Reserve will refrain from paring stimulus at a two-day policy meeting that begins tomorrow, according to a Bloomberg poll. The Bank of Japan will continue to buy bonds until it achieves a 2 per cent inflation target, Deputy Governor Kikuo Iwata said yesterday. The US will report industrial output today. Consumer confidence in South Korea rose to the highest since May 2012, according to a central bank survey.

“We are in a liquidity-fuelled stock boom,” Matthew Sherwood, head of investment markets research in Sydney at Perpetual Investments, which manages about US$25 billion (RM78.4 billion), said in an e-mail. “Rising valuations have never stopped overheating markets, so the market rise could be extended, as long as central bank stimulus remains in place.”

About two stocks advanced for each that that fell on MSCI’s Asian benchmark index, with technology and industrial companies leading gains. The gauge has rallied 10 per cent this year. Taiwan’s Taiex Index added 0.6 per cent today. Hong Kong’s Hang Seng Index rose 0.7 per cent and the Shanghai Composite Index retreated 0.2 per cent in a fifth day of losses.

Bank takeover

Zoomlion Heavy Industry Science & Technology Co jumped 5.8 per cent in Hong Kong after a Chinese newspaper apologized for publishing stories questioning the company’s finances. China Oilfield Services Ltd surged 7.9 per cent after the company said nine-month earnings rose. Chong Hing Bank Ltd tumbled 8.3 per cent in the city after the Hong Kong lender accepted a US$1.5 billion takeover bid from Yue Xiu Group.

Komatsu Ltd and China Telecom Corp are among Asian companies reporting earnings today, while Apple Inc is also due to announce results. Fifty-five per cent of the 103 companies in the Asian gauge tracked by Bloomberg that announced results so far this quarter have trailed analyst estimates.

The MSCI Asia Pacific Index has climbed 3.1 per cent this month, pushing its price-earnings multiple to 12.7 times estimated profit, according to data compiled by Bloomberg. That compares with 14.8 times for the S&P 500 and 13.4 times for the Stoxx Europe 600 Index.

Overseas buying

The Kospi index gained 0.6 per cent as foreign investors boosted their holdings of Korean stocks for a record 42nd day, lured by a widening current-account surplus, strengthening currency and the fastest economic growth in almost two years. Samsung Securities Co predicted inflows will accelerate, while BlackRock Inc, the world’s largest money manager, has been buying on expectations profit growth will quicken.

Chinese brokerages are betting the biggest jump in money- market rates since June’s record cash crunch is a sign of strength in the nation’s economy rather than finance-industry weakness. The central bank has refrained from injecting funds into the banking system since October 17, driving the benchmark seven-day repurchase rate 138 basis points higher to 4.88 per cent last week, the biggest increase in four months. It climbed a further five basis points today.

Cash crunch

The one-year swap contract, the fixed payment needed to lock in the repo rate for 12 months, rose four basis points to 4.11 per cent. That compares with a 5.06 per cent peak in June, when investors were concerned overstretched banks would default on payments.

The Federal Open Market Committee starts its two-day meeting tomorrow after US payrolls rose less than projected last month and a 16-day government shutdown took at least US$24 billion out of the economy. The Fed is likely to delay lowering monthly bond purchases until March, according to a Bloomberg News survey of economists conducted October 17-18.

Three-month implied volatility on 10-year interest-rate swaps was 74.44, a level not seen since May. The average over the past year is 81.41. The gauge is a measure of projected yield fluctuations over the next 90 days. It has fallen from 116.91 in September when some investors speculated the Fed would begin trimming its bond purchases that month. Treasuries were little changed as investors prepared to bid on US$96 billion of debt over three days starting today.

Bank of Japan

The yen weakened against all its major peers before a BOJ meeting this week at which policy makers will decide whether to continue buying more than ¥7 trillion (RM225.7 billion) of Japanese government bonds each month to help end deflation. The currency declined 0.2 per cent to 134.75 per euro and fell 0.2 per cent to 97.59 per dollar.

Australia’s dollar rose to 96.06 US cents from 95.84 following a 1 per cent slide last week that marked the biggest decline since August. The ringgit advanced as much as 1.1 per cent to 3.1232 per dollar, the strongest since June 17, after Malaysia announced plans for a consumption tax and scrapped sugar subsidies to trim its budget deficit.

West Texas Intermediate crude fell 0.2 per cent to US$97.69 a barrel in electronic trading in New York. Copper dropped 0.2 per cent to US$7,170 a metric tonne. Lead and zinc both fell 0.5 per cent. Gold was little changed at US$1,350.38 an ounce.

Millions of UK commuters were advised to stay at home today as the worst storm for five years forced rail operators across southern Britain to cancel morning rush-hour services. The country is braced for hurricane-force winds and flooding caused by torrential rain after the Met Office issued an amber alert and warned of wind gusts in excess of 80 miles per hour (129 km per hour) overnight. The Environment Agency posted over 140 flood alerts. — Bloomberg