BHP BHP Group Limited

By Chao Deng

All key markets gain on prospect of U.S. rate hike

Shares in Australia logged their best week in over a month Friday, while investors elsewhere in the region gradually adjusted to the prospect of higher U.S. interest rates.

Australia's S&P/ASX 200 gained 4.1% this week, its best weekly percentage jump since the week ended Oct. 9. The benchmark was up 0.3% Friday, the best close since Oct. 29, with the resources sector leading the gains as oil-price declines stabilized.

Elsewhere, Indonesia's JSX was up 0.7% on Friday and 1.8% for the week. Japan's Nikkei Stock Average rose 1.4% for the week, and 0.1% on Friday.

Hong Kong's Hang Seng Index and the Shanghai Composite Index rose 1.6% and 1.4%, respectively, for the week, while South Korea's Kospi gained 0.8%. On Friday, The Hang Seng added 1.1%, Shanghai was up 0.4% and the Kospi rose 0.1%.

"The main reason [for the region's gains this week] is a more relaxed approach about the Fed" by investors, said Shane Oliver, investment strategist with AMP Capital. "Worries about the Fed causing an emerging market crisis are dissipating."

Stock-market investors have started to view the Federal Reserve's tilt toward a near-term interest-rate rise more positively -- a shift from recent weeks, when worries about higher borrowing costs and slower growth triggered selling.

Now, many investors, as well as global central banks, are eager for the Fed to act, if only to settle the uncertainty.

Some said they believe any rate rises would be incremental, and that a December increase would signal the Fed's vote of confidence in the global economy.

"We have done everything we can to avoid surprising the markets and governments when we move, to the extent that several emerging market and other central bankers have for some time been telling the Fed to 'just do it,'" said Fed Vice Chairman Stanley Fischer said in San Francisco Thursday.

In Australia, shares rebounded from heavy selling the previous week when commodities prices tumbled. Energy shares on the S&P ASX 200 have gained 6.6% this week, after an 8.4% tumble the previous week.

Shares of BHP Billiton Ltd. (BHP.AU)(BLT.LN) (BHP.AU) Australia's largest mining company, are up 1.3% this week, having shed 11% the previous week, close to a decade low amid worries about the fallout from a recent dam-burst at its Brazilian iron-ore operation. Shares were up 0.4% Friday.

"Investors are realizing that the associated selloff in other resources stocks probably went too far" given that BHP had unique reasons for its selloff, Oliver said.

Meanwhile, the fallout from slumping commodities' prices and continuing concerns about China's economic slowdown continue to weigh on shares in Singapore, where many resources firms, shipbuilders and property companies trade. The FTSE Strait Times Index fell 0.2% on Friday, led by declines in traders like Noble Group Ltd. (N21.SG) and Olam International Ltd. (O32.SG) , down 2.4% and 1.6%, respectively. The index is on track to lose 0.4% this week.

The benchmark is down 13.4% year to date, surpassing Indonesia's JSX as the worst performing market in Asia. The JSX is off 12.9% year to date.

Shares of Noble Group have fallen 6.7% this week in the wake of recent accusations of irregular accounting. Fitch Ratings said Friday that Noble's liquidity profile is "just enough" to maintain its triple B rating. Moody's and Standard & Poor's this week placed the firm on negative outlook on concerns over its debt and liquidity.

A weaker yen helped buoy Japanese shares earlier this week, as the local currency touched its lowest level since late August. But the yen strengthened Thursday after the Bank of Japan kept its monetary policy unchanged. The yen last traded at Yen123.01 per U.S. dollar, up 0.1% from late in Asia Thursday.

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(END) Dow Jones Newswires

November 20, 2015 04:01 ET (09:01 GMT)

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