The MSCI Asia Pacific Index advanced 1.5 percent to 137.40 this week. Through yesterday the equity benchmark has climbed 1.9 percent this month, rebounding from a January slump, as Federal Reserve Chair Janet Yellen’s first testimony to Congress boosted optimism in the world’s biggest economy. Reports this week showed U.S. factory activity in February surpassed economists’ estimates, while the number of Americans applying for jobless benefits dropped. The yen fell as much as 0.9 percent against the dollar.
Japan’s Topix index advanced 3.3 percent this week, the biggest such gain in three months. The central bank pledged to maintain plans to expand the monetary base by 60 trillion yen to 70 trillion yen ($585 billion to $682 billion) per year and boosted lending programs as policy makers seek to revive the world’s third-biggest economy.
The country’s trade deficit jumped 71 percent to a record 2.79 trillion in January as surging import costs weigh on Prime Minister Shinzo Abe’s campaign to drive a sustained recovery. While the yen’s 18 percent decline against the dollar last year has led companies from Toyota to Mitsubishi Motors Corp. to forecast record profits, inflation driven by higher import costs is squeezing households.
Japan is in a unique situation as the BOJ continues to add stimulus, while the Fed is beginning to taper.
China’s central bank sold repurchase contracts this week for the first time since June, draining funds from the banking system. The move came after aggregate financing, the broadest measure of credit, climbed to a record 2.58 trillion yuan ($424 billion) in January, data showed Feb. 15.
The Shanghai Composite Index (SHCOMP) advanced on Feb. 17 after the credit report before ending the week 0.1 percent lower. A private gauge of the nation’s manufacturing fell to a seven-month low, data showed Feb. 20.
Hong Kong’s Hang Seng Index jumped 1.2 percent on the week. South Korea’s Kospi index increased 0.9 percent, while Taiwan’s Taiex index rose 1 percent. Australia’s S&P/ASX 200 Index climbed 1.5 percent, and New Zealand’s NZX 50 Index added 0.8 percent. Singapore’s Straits Times Index gained 2 percent.