Asia Stocks, Europe Futures Rise After China’s GDP; Copper Gains
By Jason Clenfield and Adam Haigh - Jul 13, 2012 10:27 AM GMT+0400
Asian stocks climbed, with the regional benchmark snapping a six-day drop, while U.S. and European equity futures rose and copper gained on speculation China will add stimulus amid the slowest growth since 2009.
The MSCI Asia Pacific Index (MXAP) added 0.4 percent as of 7:25 a.m. in London. Futures on the Euro Stoxx 50 rose 0.4 percent, while those on Standard & Poor’s 500 Index gained 0.3 percent. Copper increased 0.5 percent as oil erased losses of 0.6 percent. The Australian and New Zealand dollars strengthened.
Pedestrians wait to cross a road in front of an electronic stock board outside a securities firm in Tokyo, Japan. Photographer: Tomohiro Ohsumi/Bloomberg
July 12 (Bloomberg) -- Leo Drollas, chief economist at the Centre for Global Energy Studies, discusses oil prices and the outlook for production by Organization of Petroleum Exporting Countries members. He speaks with Francine Lacqua and Guy Johnson on Bloomberg Television's "City Central." (Source: Bloomberg)
July 12 (Bloomberg) -- Geoff Kendrick, head of European currency strategy at Nomura International Plc, talks about the outlook for the euro, dollar and Australian dollar. He speaks with Guy Johnson on Bloomberg Television's "The Pulse." (Source: Bloomberg)
July 12 (Bloomberg) -- Jose Wynne, head of North America foreign-exchange research at Barclays Plc, talks about the outlook for the euro-dollar exchange rate and strategy for the currencies market. Wynne, speaking with Sara Eisen and Stephanie Ruhle on Bloomberg Television's "Market Makers," also discusses Chinese monetary policy. (Source: Bloomberg)
July 12 (Bloomberg) -- Andreas Utermann, global chief investment officer at Allianz Global Investors, discusses investment strategy and the outlook for the euro and dollar. He speaks with Francine Lacqua on Bloomberg Television's "On the Move." (Source: Bloomberg)
China’s gross domestic product expanded 7.6 percent last quarter from a year earlier, the slowest pace since 2009, the National Bureau of Statistics said. Photographer: Nelson Ching/Bloomberg
China’s gross domestic product grew a less-than-estimated 7.6 percent in the second quarter, putting pressure on policy makers to build on monetary easing and increase investment as the ruling Communist Party prepares for a leadership change. Moody’s Investors Service cut Italy’s bond rating by two notches as the nation prepares to sell debt today.
“The market knows China is slowing and we expect more easing,” said Daphne Roth, Singapore-based head of Asian equity research at ABN Amro Private Banking, where she helps oversee about $207 billion. “They will continue to cut rates. The shift in their engine of growth towards the consumer will take time.”
The MSCI Asia Pacific Index pared its biggest weekly decline since the period ended May 18 to 3 percent. About five shares rose for every four that fell on the measure today. Stocks on the benchmark trade for an average of 11.7 times estimated earnings, compared with 12.8 on the S&P 500 and 10.6 on the Stoxx Europe 600 Index.
Slowing Growth
The Hang Seng China Enterprises Index (HSCEI) of mainland shares listed in Hong Kong rose 0.8 percent. Hong Kong is the only place in China where investors can trade the mainland’s biggest companies.
China’s 7.6 percent growth from a year earlier compares with an 8.1 percent gain in the previous period and the 7.7 percent median forecast of economists. The Bank of Korea today lowered its estimate for gross domestic product growth this year to 3 percent from 3.5 percent and Singapore’s economy unexpectedly shrank an annualized 1.1 percent in the three months through June from the previous quarter.
Copper for three-month delivery gained as much as 0.7 percent after the growth report from China, the world’s biggest consumer, and traded at $7,590 a metric ton. Thirteen analysts surveyed by Bloomberg said they expect prices to drop next week and nine were bullish, making the proportion of bears the highest since June 1.
U.S. Sanctions
Oil headed for a weekly increase of 1.9 percent. Crude closed at a one-week high yesterday in New York after the U.S. announced new sanctions on Iran.
The Australian dollar increased 0.2 percent against the U.S. currency, trimming its weekly drop to 0.5 percent. New Zealand’s currency also advanced 0.2 percent.
The yen was set to gain versus all 16 major peers this week before data forecast to show U.S. consumer sentiment was little changed. The euro traded near a two-year low against the dollar after Moody’s cut Italy’s bond rating to Baa2 from A3.
Italy will sell bonds maturing in 2015, 2019, 2022 and 2023 today. Moody’s cut the country’s debt rating to the same level as those of Kazakhstan, Bulgaria and Brazil, according to data compiled by Bloomberg.
The cost of insuring Asian corporate and sovereign bonds from default increased, according to traders of credit-default swaps. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan climbed 2 basis points to 168, Royal Bank of Scotland Group Plc prices show. The benchmark is set for its highest close since July 9, trading between 210 and 132.5 since Jan. 1, according to CMA.
“The market may have already factored in most of the bad news,” said Michiya Tomita, a Hong Kong-based fund manager at Mitsubishi UFJ Asset Management Co., which oversees $65 billion. “The Chinese economy could be bottoming out. Valuations are becoming attractive but at the same time there’s concern about corporate earnings.”
To contact the reporters on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net;
Adam Haigh in Sydney at ahaigh1@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
