Asian stocks rose for a third day as a global rally gathered pace and the U.S. economy grew faster than expected in the second quarter. Chinese shares capped a 10 percent two-day surge.
The MSCI Asia Pacific Index advanced 1.9 percent to 131.28 as of 4:01 p.m. in Hong Kong. The gauge rebounded after falling into a bear market on Tuesday, and is close to erasing its sixth weekly loss. The Shanghai Composite Index rose 4.8 percent, jumping for a second day.
Data on Thursday showed U.S. gross domestic product rose at a 3.7 percent annualized rate, exceeding all estimates of economists surveyed by Bloomberg, and up from the 2.3 percent reported last month. A separate report showed filings for jobless benefits declined to a three-week low.
“It gave credence to the story that the U.S. economy could be building
momentum,” said Chris Green, an Auckland-based strategist at First NZ Capital Ltd. “In the world we’re looking at now, that is of some comfort. We seem to have gained some sort of stability and people are focusing more on the underlying strength of the U.S. economy.”
The data come as Federal Reserve policy makers debate whether growth is strong enough to withstand an increase in interest rates for the first time since 2006. Central bankers gather at Jackson Hole, Wyoming, for a discussion on inflation just as China’s slowdown renews fears of falling prices. Fed Chair Janet Yellen won’t attend this year.
Japan’s Topix index advanced 3.3 percent. Taiwan’s Taiex Index added 2.5 percent and India’s S&P BSE Sensex Index rose 0.5 percent. South Korea’s Kospi index gained 1.6 percent and Singapore’s Straits Times Index rose 1 percent. Australia’s S&P/ASX 200 Index and New Zealand’s NZX 50 Index both added 0.6 percent.
Hong Kong Hang Seng Index fell 1 percent and the Hang Seng China Enterprises Index of mainland firms listed in the city slid 1.1 percent, with both measures erasing their advance in the final 30 minutes of trading. The Shanghai Composite rallied for a second day amid speculation authorities were supporting equities before a World War II victory parade next week that will showcase China’s military might.
The rebound in China’s stocks will be short-lived because state intervention is too costly to continue and valuations aren’t justified given the slowing economy, says Bank of America Corp.
“As soon as people sense the government is withdrawing from direct intervention, there will be lots of investors starting to dump stocks again,” said David Cui, China equity strategist at Bank of America in Singapore. The Shanghai Composite Index needs to fall 35 percent further before shares become attractive, he said.
The three-day rally on the MSCI Asia Pacific Index halted a global selloff that engulfed markets since China unexpectedly devalued its currency on Aug. 11, igniting concern that the slowdown in the world’s second-largest economy may threaten global growth.
E-mini futures on the Standard & Poor’s 500 Index slipped 0.4 percent after the American equities gauge rose 2.4 percent on Thursday.
“It’s been a very volatile week and I’m glad it’s over,” Green said.