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Stocks Extend Rally as Oil, Aussie Slip

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Asian stocks climbed, following a rally in U.S. equities, as crude and the yen extended losses. The Australian dollar fell after a report showed the world’s 12th-largest economy shrank by the most since 2008.

The Topix index rose in Tokyo as Japan’s currency weakened past 114 per dollar. The Aussie declined after the statistics bureau said third-quarter gross domestic product decreased 0.5% from the prior quarter, the first contraction since 2011.

Crude extended its slide below $51 a barrel after retreating Tuesday to end gains spurred by OPEC’s output deal. Copper swung to a gain.

More than $1.5 trillion has been added to the value of global equities in the past month amid speculation US President-elect Donald Trump will stoke inflation, driving the Dow Jones Industrial Average to a record and sending bond yields surging as money poured out of fixed-income assets. Investors are also betting European monetary policy will remain accommodative.

“This stabilization story in Europe and further stimulus from the ECB will be bullish for equities,” said James Woods, Sydney-based analyst at Rivkin Securities, a brokerage. “The minimum we’re expecting is for the ECB to announce a six-month extension.”

Analysts forecast the Reserve Bank of India will cut its key interest rate on Wednesday, while the European Central Bank is expected Thursday to extend its bond-buying program beyond the current March end date.

Stocks

Japan’s Topix index gained 0.9% in Tokyo. Softbank Group Corp. jumped 6.2% after Chief Executive Officer Masayoshi Son told President-elect Donald Trump he would create 50,000 new jobs in the US through a $50 billion investment in startups and new companies.

The MSCI Asia Pacific Index added 0.4%. Australian real estate and financial companies led a 0.9% advance on the S&P/ASX 200 Index; New Zealand’s S&P/NZX 50 Index slipped 0.3%. South Korea’s Kospi index rose 0.1%.

Futures on the S&P 500 Index climbed 0.1% after the measure posted a 0.3% advance on Tuesday. The Dow Jones Industrial Average rose 0.2% to close at another record.

Commodities

West Texas Intermediate crude dropped 0.3% to $50.79 a barrel, after falling 1.7% the previous session.

Copper gained 0.6%, swinging from a 0.6% decline. Aluminium lost 0.2%, extending Tuesday’s drop. The metal will probably tumble next month as an “irrational” increase in prices prompts companies to restart plants, while new capacity also ramps up in the world’s largest supplier, according to China’s top metals industry group.

Spot gold fell 0.2% to $1,167.51 an ounce.

Currencies

The Australian dollar traded as low as 74.17 US cents before paring its drop to 0.3%. The GDP report, which showed government spending fell and imports rose, spans a period when Australia’s election returned Prime Minister Malcolm Turnbull with a razor-thin majority and government spending and resource exports failed to lift growth. The Reserve Bank of Australia on Tuesday kept interest rates unchanged and Governor Philip Lowe said “some slowing in the year-ended growth rate is likely.”

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, was little changed.

The yen weakened 0.2% to 114.25 per dollar.

(Source: Bloomberg)