Asia Stocks Rise as Yellen Dovish Comments Lift Risk Appetite

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Asian stocks advanced after Federal Reserve Chair Janet Yellen signaled the U.S. central bank remains wary of raising interest rates while threats remain to domestic growth from a slowing global economy.

The Topix index fell in Tokyo after Yellen’s comments strengthened the yen, souring the outlook for Japanese exporters.

The MSCI Asia Pacific Index gained 0.5 percent to 128.34 as of 9:03 a.m. in Tokyo. The measure is on course to post its largest monthly advance since October, climbing 7.7 percent to pare its quarterly loss to 2.7 percent. It is appropriate for U.S. central bankers to “proceed cautiously” in raising rates because the global economy presents heightened risks, Yellen said in a speech to the Economic Club of New York. The yen traded at 112.71 after strengthening 0.7 percent Tuesday.

Yellen’s comments helped the Standard & Poor’s 500 Index rise 0.6 percent, its biggest jump in more than two weeks, erasing this year’s losses. E-mini futures on the gauge added 0.1 percent percent.

Traders are now pricing in no chance of a U.S. rate increase in April, while odds for June slid to 28 percent from 38 percent on Monday. The probability of higher borrowing costs doesn’t rise above 50 percent until November.

Japan’s Topix index dropped 0.5 percent. Australia’s S&P/ASX 200 Index climbed 0.7 percent. South Korea’s Kospi index rose 0.5 percent and New Zealand’s S&P/NZX 50 Index added 0.3 percent. Markets are yet to open in Hong Kong and China.

Source : Bloomberg