Tuesday, 3 July 2012

Asian Stocks Gain, Yen Weakens On Stimulus Hopes

By Bloomberg News - Jul 4, 2012 8:47 AM GMT+0400
Asian stocks rose, heading for the longest winning streak this year, the won hit a two-month high and credit risk fell for the seventh day on speculation Chinese and European central bankers will ease monetary policy. Rubber climbed after U.S. factory orders and auto sales beat estimates.
The MSCI Asia Pacific (MXAP) Index climbed for the sixth day and was up 0.5 percent as of 1:17 p.m. in Tokyo. Australia’s S&P/ASX 200 Index jumped 1.1 percent after retail sales advanced more than expected in May. Standard & Poor’s 500 Index futures were little changed. The won gained 0.3 percent to 1,134.55 per dollar. Rubber rose to a one-month high in Tokyo. Credit-default swaps in Asia are headed for their longest period of losses since February.
A man monitors an electronic stock board at a securities firm in Seoul. Photographer: Seokyong Lee/Bloomberg
The European Central Bank will cut interest rates tomorrow, according to a Bloomberg survey of economists, and a government- linked newspaper in China said policy makers may lower lenders’ reserve requirements three more times this year. The International Monetary Fund said further monetary policy easing by the Federal Reserve may be needed as the organization reduced its growth estimate for the world’s biggest economy.
“There is some room for the rally to last for the next couple of weeks,” Kelvin Tay, a Singapore-based chief investment officer at the wealth management unit of UBS AG, said on Bloomberg TV. “The hands of the central banks are not so tied and they can look at perhaps easing monetary policy as they try to help stimulate economies.”
Factory orders in the U.S. rose in May for the first time in three months, Commerce Department data showed yesterday. General Motors Co., Ford Motor Co. and Chrysler Group LLC reported U.S. auto sales for June that topped analysts’ estimates, lifting expectations that demand for rubber tires will improve.

Euro Slips

December-delivery rubber advanced as much as 3.3 percent to 259.6 yen a kilogram, the highest level for a most-active contract since June 1, before trading at 257.7 yen on the TokyoCommodity Exchange. Oil in New York fell 0.4 percent to $87.35 a barrel after surging almost 5 percent yesterday.
The euro fell 0.2 percent to $1.2587 and 100.41 yen before data forecast to confirm European services and manufacturing industries shrank. The 17-nation currency also slipped ahead of a Spanish bond sale tomorrow.
London-based Markit Economics will say today that a final reading on its euro-area composite index was unchanged at 46 last month from May, according to the median estimate in a Bloomberg News survey of economists. That’s the lowest since June 2009 and below the 50 level that signals expansion of services and manufacturing output.

Spanish Auction

Spain is scheduled to auction three-, four- and 10-year debt tomorrow. The nation’s benchmark 10-year bond yielded 6.25 percent yesterday, compared with a euro-era high of 7.29 percent reached June 18.
About two stocks rose for every one that fell on the MSCI Asia Pacific Index. The regional benchmark climbed toward its highest close since May 10 and a six-day advance would complete its longest streak of gains since December.
Japan’s Nikkei 225 (NKY) Stock Average rose 0.4 percent and South Korea’s Kospi index advanced 0.3 percent. Options protecting against losses in South Korean shares have fallen to the cheapest levels in six months, according to data compiled by Bloomberg. Hong Kong’s Hang Seng Index rose 0.2 percent.
China may cut lenders’ reserve requirements three more times during 2012, by 0.5 percent each time, Shanghai Securities News, owned by the official Xinhua News Agency, reported on its website yesterday, citing a banking sector development report released by the China Banking Association.

Forecast Cut

BHP Billiton Ltd. (BHP) jumped more than 2 percent to lead gains among commodity stocks as a surge in raw-materials prices over the past week boosted the earnings outlook at the world’s largest mining company. Komatsu Ltd. (6301), a Japanese maker of construction equipment that gets 23 percent of sales in the U.S., rose 2.2 percent. Real Nutriceutical Group (2010) Ltd. soared as much as 15 percent after billionaire Li Ka-shing increased his stake in the provider of health products.
The ECB will lower its main refinancing rate by a quarter- percentage point to 0.75 percent tomorrow, economists in a Bloomberg survey forecast. The Bank of England’s Monetary Policy Committee will raise its target for bond purchases by 50 billion pounds ($79 billion) to 375 billion pounds the same day, according to a Bloomberg survey.
The IMF said yesterday the U.S. economy will grow by 2 percent this year, cutting its previous 2.1 percent estimate. Managing Director Christine Lagarde said further monetary policy easing may be needed if the situation deteriorates.
Weak employment figures in the U.S. may prompt the Fed to initiate fresh stimulus, BNP Paribas SA said yesterday. Labor Department nonfarm payrolls data are due July 6. U.S. financial markets are closed today for the Fourth of July holiday.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell three basis points to 166 in Singapore, Standard Chartered Plc prices show. The gauge is on track for its lowest close since May 3, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.
To contact Bloomberg News staff for this story: Chua Baizhen in Beijing atbchua14@bloomberg.net
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net