By Jae Hur & Emma O’Brien - Jul 22, 2013 9:08 AM GMT+0400
Shinzo Abe, Japan's prime minister and president of the Liberal Democratic Party (LDP), places a red paper rose on an LDP candidate's name to indicate an upper house election victory at the party's headquarters in Tokyo on July 21, 2013. Photographer: Tomohiro Ohsumi/Bloomberg
Most Asian stocks climbed, snapping a three-day drop, and gold rose amid speculation U.S. housing data and company earnings will show the world’s largest economy is gaining momentum. The yen advanced after Japan’s ruling party failed to win an independent majority in elections.
The MSCI Asia Pacific Index added 0.3 percent at 1:41 p.m. in Tokyo as Australia’s S&P/ASX 200 Index increased 0.6 percent. Futures on the Standard & Poor’s 500 Index gained 0.1 percent after the gauge closed at a record July 19. The yen jumped 0.7 percent against the dollar and two-year Treasury yields slid. Gold rose 1.6 percent and copper climbed 0.9 percent.
Shinzo Abe, Japan's prime minister and president of the Liberal Democratic Party (LDP), places a red paper rose on an LDP candidate's name to indicate an upper house election victory at the party's headquarters in Tokyo on July 21, 2013. Photographer: Tomohiro Ohsumi/Bloomberg
July 22 (Bloomberg) -- Hans Goetti, chief investment officer at Finaport Investment Intelligence, talks about the outlook for Japan's financial markets following Prime Minister Shinzo Abe's election victory yesterday. Abe’s winning of the first bicameral majority for the ruling coalition in six years sets up an internal government battle as he seeks to revamp economic to defense policies. Goetti speaks from Singapore with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
July 22 (Bloomberg) -- Hamish Pepper, a currency strategist at Barclays Plc in Singapore, talks about the outlook for the yen and trading strategy. Pepper also discusses his expectations for the Japanese government's economic policies. He speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
July 22 (Bloomberg) -- Taro Kono, a lawmaker with Japan's Liberal Democratic Party, talks about Prime Minister Shinzo Abe’s victory in elections to the upper house of parliament yesterday and the prospects for the government's economic and foreign policy. He speaks from Tokyo with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
A visitor looks at an electronic board displaying stock figures at Japan Exchange Group Inc.'s Tokyo Stock Exchange (TSE) in Tokyo. Photographer: Kiyoshi Ota/Bloomberg
Companies from Apple Inc. (AAPL) to Ford Motor Co. are set to post earnings in the U.S. this week, after more than 70 percent of S&P 500 members that have reported second-quarter results topped analyst estimates, data compiled by Bloomberg show. Home sales probably climbed in June to the highest level since November 2009. Abe’s failure to win a single-party majority in upper-house elections boosted speculation he will find it harder to push through reforms.
“The big focus this week is sure to be the U.S. earnings season,” Chris Green, an Auckland-based strategist at First NZ Capital Ltd., a brokerage and wealth management firm, said by phone. “There’s a lot of companies reporting and it could go a long way toward setting the tone going forward. Existing homes and new homes data are also expected to be pretty positive.”
Combined purchases of existing and new houses increased to a 5.74 million annualized pace last month, according to the median forecasts of economists in a Bloomberg survey.
Home Sales
Sales of previously owned homes rose to 5.26 million in June from 5.18 million the prior month, according to the median forecast of economists surveyed before the National Association of Realtors’ report today. On July 24, Commerce Department data will show purchases of new homes increased to a 484,000 pace last month, the highest level since June 2008, according to a separate Bloomberg survey.
The Bloomberg Dollar Index fell 0.2 percent to 1,030.93, extending a weekly drop. The greenback weakened against almost all of the 16 major currencies tracked by Bloomberg as Pacific Investment Management Co.’s Bill Gross said he expects the U.S. Federal Reserve won’t tighten policy before 2016.
Hong Kong’s Hang Seng Index dropped 0.2 percent with ChinaMinsheng Banking Corp. leading smaller lenders lower after the nation removed a floor on lending rates. China’s Shanghai Composite Index sank 0.5 percent. The People’s Bank of China ended a floor on borrowing costs set at 30 percent below the benchmark, according to a July 19 statement.
Japanese Shares
Japanese shares swung between gains and losses as Abe’s Liberal Democratic Party and its New Komeito ally were projected to secure a majority of at least 133 in the 242-seat upper house, according to estimates by state broadcaster NHK. The LDP has controlled the lower house since elections in December.
Japan’s Nikkei 225 Stock Average fell 0.1 percent, reversing earlier gains. The Topix Index was little changed. Nippon Paint Co. jumped 6.7 percent after the paint maker raised its profit forecast.
The yen strengthened to 99.93 per dollar. The currency gained 0.6 percent to 131.48 per euro, after weakening over the previous three trading days.
“People had expected that if he’d achieved a single-party majority he could have placed more pressure on the Bank of Japan to ease policy further, and that would have been a yen negative,” Hamish Pepper, a currency strategist at Barclays Plc in Singapore, said in a Bloomberg Television interview, referring to Abe. “That’s what we’re seeing now in the moves in dollar-yen.”
U.S. Treasuries
South Korea’s Kospi Index added 0.5 percent while the won gained 0.3 percent to 1,118.18 per dollar, strengthening for a second day. Malaysia’s ringgit rose 0.4 percent to 3.1803 a dollar, while the Thai baht added 0.4 percent to 30.95 versus the U.S. currency.
Yields (USGG2YR) on U.S. Treasuries due in two years declined two basis points to 2.46 percent. Australian 10-year bonds also rose, pushing yields down two basis points to 3.65 percent.
The cost of insuring corporate and sovereign bonds in the Asia-Pacific region against non-payment declined, according to traders of credit-default swaps. The Markit iTraxx Japan index fell 2 basis points to 90.5 basis points, according to Citigroup Inc. prices. The benchmark is set for the lowest close since May 28, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.
Gold jumped to $1,317.95 an ounce today, while silver surged 2.2 percent to $19.938 and platinum and palladium climbed at least 0.5 percent. Copper for delivery in three-months rose to $6,977 a metric ton in London, gaining for a third day. Rubber futures added 1.3 percent in Tokyo.
West Texas Intermediate crude increased 0.2 percent to $108.23 a barrel, rising for a fourth day. WTI became more expensive than Brent for the first time in almost three years last week as pipeline and rail shipments helped clear a bottleneck that reduced the price of the U.S. benchmark.
To contact the reporters on this story: Jae Hur in Tokyo at jhur1@bloomberg.net; Emma O’Brien in Wellington at eobrien6@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
