Asian stocks rally pauses, BoE eyed

Regional sharemarkets halted their week-long rally ahead of the Bank of England’s rates announcement.

A weeklong Asian stocks rally slowed Thursday, with investors waiting to see whether a rate decision by the Bank of England would make or break equity gains.

Japan’s Nikkei Stock Average kept its place as regional outperformer on continued hopes for stimulus. The benchmark ended up 1 per cent, bringing its gain for the week to 8.5 per cent and keeping it on track to post the best weekly performance so far this year. The yen weakened as investors sold haven assets.

Nintendo Co. continued to soar in Tokyo on the strength of the craze for the “Pokémon Go” app, an augmented-reality game in which it has a minority stake. Thursday’s 16 per cent rise brings the videogame maker’s total gain this week to more than 55 per cent.

But the euphoria in Asian equities from earlier in the week mostly dissipated on Thursday as investors stayed cautious ahead of the Bank of England’s Monetary Policy Committee meeting, set for after Asian markets close.

The meeting “will probably will be the deciding factor on how the markets will react later today,” said Tareck Horchani, a senior sales trader at Saxo Capital Markets in Singapore. “The market is pricing a cut.”

In the rest of Asia Pacific, Australia’s S&P/ASX 200 rose 0.4 per cent, Korea’s Kospi gained 0.2 per cent and Hong Kong’s Hang Seng Index was recently down 0.8 per cent. China’s Shanghai Composite Index ended down 0.2 per cent.

Singapore’s Straits Times Index was off 0.1 per cent when the Singapore market unexpectedly halted trading in the late morning, the fourth outage in two years. The market operator, Singapore Exchange Ltd., didn’t specify a reason for the freeze. It first said the market would reopen at 2 p.m., then pushed it back to 4 p.m. before saying trading would not resume Thursday.

In 2014, the exchange suffered three outages, for which it blamed at technical glitch.

Energy shares in Hong Kong, China and Australia sank after crude-oil prices slumped overnight. US oil prices sank to a two-month low after data showed record-high US inventories of crude oil and refined products. Brent was recently trading at $US46.74 per barrel in Asia trade.

In China, the benchmark Shanghai Composite Index snapped a three-day rally after trade data from late Wednesday disappointed investors. The decline in exports accelerated in June from the two previous months.

Meanwhile, Malaysian stocks fell after the country’s central bank on Wednesday cut the overnight policy rate for the first time in seven years. The FTSE Bursa Malaysia KLCI was last down 0.2 per cent.

In other markets, some sovereign Asian government bonds rallied, in anticipation of fresh central-bank easing globally. The yield on the 10-year Australian note slipped to 1.92 per cent, while the yield on the 10-year Malaysian note sank to 3.56 per cent. Yields drop when bond prices rise.

Asian sovereign bonds are rallying “on expectation that rates will stay low for a while and [investors] need the yield,” Mr Horchani said.

- Dow Jones newswires