By Yoshiaki Nohara - Jul 26, 2012 7:54 AM GMT+0400
Asian stocks headed for the first advance in five days after a drop in U.S. new home sales fueled speculation the Federal Reserve may take new steps to spur growth, boosting demand for growth-sensitive shares.
Newcrest Mining Ltd. (NCM), Australia’s biggest gold producer, paced gains among material shares as metal and commodity prices rose. Canon, the world’s No. 1 camera maker, slumped 6.9 percent after in Tokyo cutting its profit forecast. Olympus Corp. (7733) jumped 10 percent after Terumo Corp., a Japanese medical device maker, proposed to invest 50 billion yen ($640 million) in the camera maker and merge with it.
Asian stocks headed for the first advance in five days after a drop in U.S. new home sales fueled speculation the Federal Reserve may take new steps to spur growth, boosting demand for growth-sensitive shares.
“Company-specific news is driving us, but the market is generally a bit more positive based on the QE3 expectation,” Matt Riordan, a portfolio manager who helps manage about $6.5 billion in Sydney at Paradice Investment Management Pty., said, referring to a third-round of quantitative easing in the U.S. “Europe is lurching and no closer to a solution.”The MSCI Asia Pacific Index (CRY) rose 0.5 percent to 113.48 as of 12:51 p.m. in Tokyo, with five stocks rising for each four that fell. Finance and material stocks led gains in the measure, which closed yesterday at the lowest level since June 12.
The MSCI Asia Pacific Index fell about 12 percent from this year’s high on Feb. 29 through yesterday amid concern China’s economy is slowing and Europe’s sovereign-debt crisis will worsen. The regional benchmark index traded at 11.5 times estimated earnings as of yesterday, compared with 13 for the Standard & Poor’s 500 Index (SPXL1) and 10.5 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Nikkei, Kospi
Japan’s Nikkei 225 Stock Average rose 0.5 percent as foreign investors sold 42.1 billion yen in stocks, according to the Ministry of Finance. South Korea’s Kospi Index advanced 0.3 percent after data showed the nation’s economy grew at the slowest pace in almost three years.
Australia’s S&P/ASX 200 gained 0.5 percent. New Zealand’s NZX 50 Index advanced 0.8 percent as the nation’s central bank extended a pause in its benchmark interest rate. Singapore’s Straits Times Index added 0.6 percent.
Hong Kong’s Hang Seng Index was little changed. London Metal Exchange shareholders approved the $2.2 billion takeover offer from Hong Kong Exchanges & Clearing Ltd., ending a 10- month contest. China’s Shanghai Composite Index added 0.2 percent after Il Houng Lee, the International Monetary Fund’s top official in China, said monetary stimulus measures in place are enough to support growth.
U.S. Futures
Futures on the Standard & Poor’s 500 Index fell 0.1 percent today. The index lost less than 0.1 percent in New York yesterday, erasing gains in the final hour of trading, after a report showed demand for new U.S. homes unexpectedly dropped in June from a two-year high.
Weaker-than-expected economic data intensified bets that the Fed is moving closer to taking new steps to spur economic growth. Fed Chairman Ben S. Bernanke last week said policy makers are studying options for further easing that could be deployed in case economic growth remains too feeble to produce a lasting decline in unemployment. The Federal Open Market Committee meets next week.
Material shares advanced. The Thomson Reuters/Jefferies CRB Index of raw materials increased 0.3 percent yesterday. The London Metal Exchange Index of prices for six industrial metals including copper and aluminum rose 0.3 percent.
Newcrest Mining added 3.2 percent to A$22.85 in Sydney. Trading company Hyosung Corp. advanced 6.1 percent to 48,550 won in Seoul. Nisshin Steel Ltd. gained 4.9 percent to 85 yen in Tokyo.
Earnings Results
Earnings have missed analyst estimates for 51 percent of the 85 firms listed on the Asia-Pacific index that have reported quarterly results and offered forecasts this month, according to data compiled by Bloomberg.
Gains in stocks were limited as investors watched earnings reports. Canon (7751) plunged 6.9 percent to 2,493 yen in Tokyo after cutting its full-year profit forecast to 250 billion yen due to a stronger yen and expectations for weaker global economic growth. The share fell the most on the MSCI Asia Pacific Index.
Koito Manufacturing Co., which supplies automobile lighting parts, slumped 6.5 percent to 915 yen after lowering its first- half profit forecasts and its first-quarter results missed consensus.
“On the one hand, you’re going to see a lot of weakness from global cyclical export companies,” Kathy Matsui, chief Japan strategist at Goldman Sachs Group Inc. in Tokyo, told Bloomberg TV. “On the other hand, you’re going to see surprisingly resilient results coming from domestic demand orientated companies.”
Merger Proposal
In Hong Kong, Sands China Ltd., the Asian unit of Sheldon Adelson’s Las Vegas company, lost 6.7 percent to HK$20.75 after saying its second-quarter net income fell 40 percent from last year.
Among other stocks that rose, Olympus surged 10 percent to 1,411 yen in Tokyo. Terumo Corp., Asia’s biggest maker of medical devices, proposed investing 50 billion yen in the scandal-hit camera maker and merging with it, seeking to scupper a plan by Sony Corp.
Qantas Airways Ltd. rose 11 percent to A$1.10 in Sydney after the Australian Financial Review said the carrier was close to forming a long-haul alliance with Emirates Airline.
To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
