Asian Stocks Rise on Europe Rates as Yen Slips; Gas Sinks

by **Cals** Fri 05 Jul 2013, 09:07

Asian Stocks Rise on Europe Rates as Yen Slips; Gas Sinks
By Emma O’Brien & Adam Haigh - Jul 5, 2013 8:48 AM GMT+0800

Asian stocks rose, fueling a second weekly gain in the benchmark gauge, and the yen weakened after European policy makers signaled borrowing costs will be kept lower for longer and as investors awaited U.S. employment data. Copper futures slumped and natural gas declined.
The MSCI Asia Pacific Index of regional equities climbed 0.3 percent by 9:46 a.m. in Tokyo, set for a 0.4 percent advance in the week, as shares in Japan and Australia rose. South Korea’s Kospi gauge climbed even as Samsung Electronics Co. (005930) fell on lower-than-estimated earnings. Standard & Poor’s 500 Index (SPX) futures jumped 0.9 percent. The yen slipped against 12 of 16 major currencies tracked by Bloomberg and the Korean won also weakened. Gas futures declined 0.6 percent, while contracts on copper lost 0.8 percent as gold retreated.

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A pedestrian walks past an electronic stock board displaying the Nikkei 225 Stock Average figure, top center, and other indices in Tokyo. Photographer: Junko Kimura/Bloomberg
European Central Bank President Mario Draghi pledged to keep interest rates at a record low for an “extended period” yesterday, after Bank of England chief Mark Carney said increases in market rates weren’t warranted. The rhetoric contrasts with that of the Federal Reserve, which has fueled a global stock and bond rout by signaling stimulus could be cut this year. U.S. employers added almost as many workers last month as in May and the jobless rate probably fell, according to Bloomberg surveys of economists before reports due today.
“The European Central Bank and the Bank of England have both come out and tried to combat the rise in bond yields with some forward guidance,” Keith Poore, the Wellington-based head of investment strategy at AMP Capital Investors Ltd., which manages more than $130 billion, said by phone. “The market was surprised by the dovish comments. Remember, global growth is picking up and this should flow through to earnings and definitely help stocks go higher.”
Topix Advances
Japan’s Topix Index (TPX) added 0.9 percent as Australia’s S&P/ASX 200 measure climbed the same amount, led by healthcare companies and raw materials producers. New Zealand’s NZX 50 Index (NZSE50FG) rose 0.6 percent in a second day of gains.
The Kospi jumped 0.6 percent. Samsung, the index’s biggest company, slumped 1.7 percent inSeoul. Operating profit in the second quarter for the world’s largest TV maker was 9.5 trillion won ($8.3 billion), compared with an average analyst estimate of 10 trillion won and from 6.5 trillion won a year earlier.
Global equities have lost about $4 trillion in value and U.S. Treasury yields have climbed since May 22, when Fed Chairman Ben S. Bernanke indicated the central bank’s asset-buying program could be tapered should the job market continue to improve. The purchases, currently at $85 billion a month, have helped the MSCI World gauge rally 17 percent in the past year and fueled gains in emerging markets. Ten-year U.S. bond yields have surged more than half a percentage point since May 21.
Payrolls Outlook
The U.S. unemployment rate probably fell to 7.5 percent in June, matching April’s four-year low and down from 7.6 percent in May, according to the median of 82 economists’ estimates in a Bloomberg survey before the Labor Department report today. Payrolls grew by 165,000 workers, after rising 175,000 in May, the median of 70 projections shows. U.S. markets resume today after yesterday’s Independence Day holiday.
“All and sundry await tonight’s U.S. nonfarm payrolls report as the next test of U.S. sentiment,” Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington, wrote in an e-mail to clients today.
The yen weakened to 100.24 per dollar, after slipping 0.1 percent yesterday. Japan’s currency has climbed 2.5 percent versus the dollar since Bernanke’s May 22 comments on the outlook for tapering. The yen retreated 0.1 percent to 129.33 per euro today, trimming yesterday’s 0.6 percent advance.
Dollar Index
The Dollar Index, which tracks the greenback against six major peers, jumped 0.7 percent, the most since June 19 on a closing basis. The gauge is poised for a third weekly advance, rising 0.8 percent.
The won slipped 0.1 percent to 1,139.91 per dollar, trimming a 0.2 percent climb this week.
“While the spigot is gradually shut in the U.S., the spigot in Europe and U.K. will remain open,”Nizam Idris, head of fixed income and currency strategy at Macquarie Bank Ltd. In Singapore, said by phone. “This does not change the fact that the dollar will remain strong against emerging-market currencies.”
In an unprecedented move, Draghi gave a forward-looking statement on rates after keeping the benchmark at 0.5 percent yesterday. The ECB’s policy stance will remain accommodative as long as needed as risks to euro-area growth remain “on the downside,” he said. Carney, making his debut at the helm of the BOE, said recent increases in market interest rates were “not warranted by the recent developments in the domestic economy,” and also left rates at 0.5 percent.
Weakening Euro
The Stoxx Europe 600 Index rallied the most in two months yesterday, climbing 2.3 percent. The yield on 10-year gilts fell one basis point, or 0.01 percentage point, to 2.38 percent while the British pound weakened 1.4 percent yesterday, the biggest drop since September 2011. The FTSE 100 Index climbed 3.1 percent in London.
The euro slipped 0.1 percent to $1.2902, after slumping 0.7 percent yesterday.
Futures on the Hang Seng China Enterprises Index jumped 1.1 percent today, after the gauge of Chinese stocks traded in Hong Kong climbed 1.4 percent yesterday. Contracts on Hong Kong’s Hang Seng Index climbed 1.1 percent.
Officials from the People’s Bank of China and the China Banking Regulatory Commission will address reporters today to talk about financial support for structural adjustments in the economy, according to an e-mail from the State Council’s information office.
Missing Data
China suspended the release of industry-specific data from a monthly survey of manufacturing purchasing managers, with an official saying there’s limited time to analyze the large volume of responses.
“We now have 3,000 samples in the survey, and from a technical point of view, time is very limited -- there are many industries, you know,” Cai Jin, vice president of the China Federation of Logistics & Purchasing, which compiles the data with the National Bureau of Statistics, told reporters yesterday in Beijing.
The manufacturing PMI released this week omitted readings on export orders, imports and inventories without any explanation from the government.
The MSCI Emerging Markets Index added 0.1 percent in early trading, rising a second day.
Crude oil climbed less than 0.1 percent to $101.26 a barrel, poised for the highest close since May 3 last year. The U.S. is the world’s biggest consumer of crude. Natural gas futures retreated for the first time this week.
Gold dropped 0.1 percent to $1,248.13 an ounce, trimming a weekly advance of 1.1 percent. Silver added 0.2 percent, while platinum and palladium jumped at least 0.2 percent. Tin and nickel for three-month delivery retreated on the London Metal Exchange, while aluminum and zinc rose.
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