Asia: Stocks rally as investors grow confident over Fed rate hike

Most Asian stocks ended the week on an upbeat note as investors looked to have come to terms with the prospect of higher US interest rates.

The Shanghai Composite Index gained 0.37% on Friday, extending its weekly gains for the week to 1.4%, while Hong Kong’s Hang Seng Index rose 1.13% and was up 1.6% for the week.

Data released earlier in the session showed the conference board of China's leading economic index rose 0.6% month-on-month in October, slowing down from a 1.6% advance in the previous month.

Japan’s Nikkei Stock Average rose 0.10% and gained 1.4% this week, while South Korea’s Kospi was flat on Friday but closed the week 0.8% higher.

Analysts said by hinting strongly at a December rate hike, the Federal Reserve has erased the uncertainty that had triggered widespread volatility over the last couple of months, while the prospect of a gradual rise was well received by investors.

“Expectations of a US December rate hike may be rising, although we still expect further delay, but sentiment is supported by conviction in subsequent rate rises being slow and steady,” said Michael Van Dulken, head of research at Accendo Markets.

“The Fed can’t, after all, risk derailing global economic recovery while peers are obliged to remain in easy policy mode.”

Elsewhere, Indonesia’s JSX rose 0.47% and advanced 1.8% for the week, while Australia’s S&P/ASX 200 gained 0.26%, its highest close since 29 October, and extended its weekly gains to 4.1%, which is its best weekly percentage jump since the week to 9 October.

In Australia, stocks rebounded from the heavy selling that had characterised the previous week in the wake of a slump in commodity prices.

BHP Billiton, the country’s biggest miner, gained 1.82% on Friday, recouping part of the losses it booked last week when it slid 11%.

However, the decline in commodity prices and the slowdown in China continued to pile pressure on shares in Singapore, where the FTSE Strait Times Index lost 0.07% and fell 0.4% for the week. The decline made the index the worst performing in Asia, as it has lost 13.4% this week.

On the currencies front, the yen, which strengthened on Thursday after the Bank of Japan kept its monetary policy unchanged, was broadly flat against the dollar, while the Australian dollar gained 0.31% against the greenback.