Tuesday, 11 December 2012

Asian Stocks Rise a 10th Day on Fed Optimism as Won Pares Gains

By Bloomberg News - Dec 12, 2012 7:32 AM GMT+0400

Asian stocks rose, with the MSCI Asia Pacific (MXAP) Index headed for the longest win streak in three years, after Japan’s machinery orders increased and as investors bet the Federal Reserve will step up monetary easing. The won pared gains as North Korea fired a rocket. Wheat rebounded.
The MSCI Asia Pacific Index added 0.4 percent as of 12:08 p.m. in Tokyo, gaining for a 10th day. Standard & Poor’s 500 Index futures were little changed. South Korea’s won pared an advance after touching a 15-month high. Wheat in Chicago rose 0.2 percent after sliding more than 3 percent yesterday. Brent crude in London increased 0.3 percent. Bond risk in Australia fell to the lowest since August 2011.
Employees work on the trading floor of the Tokyo Stock Exchange in Tokyo, Japan. Photographer: Tomohiro Ohsumi/Bloomberg
Dec. 11 (Bloomberg) -- Kevin Caron, a market strategist at Stifel Nicolaus & Co., Christopher Low, chief economist at FTN Financial, and Matt McCormick, a money manager at Bahl & Gaynor Inc., talk about the outlook for Federal Reserve monetary policy. They speak with Sara Eisen and Adam Johnson on Bloomberg Television's "Street Smart." (Source: Bloomberg)
Japan’s machinery orders rose for the first time in three months, a sign that companies expect the world’s third-largest economy to return to growth in 2013. North Korea launched a long-range rocket today in defiance of international sanctions, according to the South Korean and Japanese governments. The Fed will announce today $45 billion in monthly Treasury buying after a two-day meeting, according to a Bloomberg News survey of economists.
“The U.S. economy is recovering, and the consensus is that the Fed will make a move to add more strength to it,” said Koji Toda, chief fund manager at Resona Bank Ltd. in Tokyo, which oversees about 15 trillion yen ($182 billion). “The rocket launch surprised me a bit because news reports said they were putting it off for now. It’s not a good thing at all, but it hasn’t appeared to scare the market much.”
Fed officials are considering whether to supplement $40 billion a month of mortgage-bond buying with purchases of Treasuries when their Operation Twist program expires at the end of the month. If expanded as expected, the new program will push the central bank’s balance sheet to almost $4 trillion.

Guoco Buyout

Japan’s Nikkei 225 Stock Average gained 0.5 percent as the broader Topix Index climbed 0.5 percent. The Topix will rally 14 percent in the next six months as automakers lead gains amid a stronger global economy, said Kathy Matsui, the chief Japan strategist at Goldman Sachs Group Inc.
Machinery orders, an indicator of capital spending, climbed 2.6 percent in October from the previous month, the Cabinet Office said today in Tokyo. Economists had estimated a 3 percent advance.
Mitsubishi Motors Corp. jumped 7.6 percent after the Nikkei newspaper reported the Japanese carmaker’s withdrawal from European production will boost its profit. Guoco Group (53) Ltd., theinvestment company controlled by Malaysian billionaire Quek Leng Chan, surged 29 percent inHong Kong after receiving a HK$8.25 billion ($1.1 billion) buyout offer.
The Hang Seng Index rose 0.5 percent in Hong Kong, while a measure of Chinese companies listed in the city climbed 1 percent. Taiwan’s Taiex Index increased 0.6 percent. South Korea’s Kospi Index gained 0.2 percent.

Cliff Talks

U.S. stocks rallied yesterday, with the Dow Jones Industrial Average erasing its decline since Election Day, as traders awaited progress on federal budget negotiations.
President Barack Obama is seeking a budget deal with Republican lawmakers to avert the so-called fiscal cliff, which would result in more than $600 billion of automatic tax increases and spending cuts next year. House Speaker John Boehner said yesterday he is still “hopeful” the parties can reach an agreement before the end of the year.
The won gained as much as 0.3 percent as a report showed unemployment held at a four-year low, before trading little changed at 1,076.73 to the dollar.
North Korea launched a rocket at 9:51 a.m. local time, according to a South Korean Defense Ministry official speaking on condition of anonymity. Japan’s government said the rocket was fired at 9:49 a.m., and estimated that debris fell into the sea away from the Korean peninsula and east of the Philippines.

OPEC Meeting

Wheat futures advanced to $8.2325 a bushel after tumbling yesterday to a five-month low. A U.S. Department of Agriculture report showed global inventories will shrink less than forecast, easing concern that droughts from the U.S. to Australia were creating a grain shortage.
Brent crude in London rose to $108.37 a barrel while oil in New York gained 0.2 percent to $85.96. Most members of the Organization of Petroleum Exporting Countries have signaled they’ll keep the output target unchanged as delegates gathered in Vienna to decide on the group’s production quota.
The cost of insuring Australian corporate bonds from default is on course for its lowest close since August 2011. The Markit iTraxx Australia index slid 3 basis points to 124 basis points as of 11:19 a.m. in Sydney, according to prices from Australia & New Zealand Banking Group Ltd. A close of 124 would be the least since the index fell to 122.4 on Aug. 2 last year, prices from data provider CMA show.
To contact Bloomberg News staff for this story: Chua Baizhen in Singapore at bchua14@bloomberg.net
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net