Asian stocks (MXAP), the South Korean won and copper rose on speculation European leaders will agree on steps to ease the region’s debt crisis at a summit tomorrow. Australia’s shares and currency gained after economic growth beat estimates.
The MSCI Asia Pacific Index increased 1.2 percent as of 3:03 p.m. inTokyo, the seventh advance in eight days. Standard & Poor’s 500 Index futures climbed 0.5 percent. The S&P/ASX 200 Index of Australian shares added 0.7 percent and the so-called Aussie rose 0.2 percent. Copper gained 0.7 percent and South Korea’s won appreciated against all 16 major counterparts.
Standard & Poor’s warning this week on the debt ratings of 15 euro-area governments will spur European leaders to ratchet up efforts at a summit starting tomorrow, German Finance Minister Wolfgang Schaeuble said yesterday. Greek Prime Minister Lucas Papademos received parliamentary approval for the 2012 budget, seeking to cut the deficit to 5.4 percent of gross domestic product.
“There is an expectation in the market that Europe will advance measures to overcome the debt issues,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc. “Investors still want to see the results of meetings this week of the European Union andEuropean Central Bank.”
The euro advanced for a third day, adding 0.1 percent to $1.3418. A German-French push for closer economic ties in Europe won the backing of U.S. Treasury Secretary Timothy F. Geithner, who urged governments to work with central banks to erect a “stronger firewall” to end the debt crisis. The European Central Bank will probably cut the benchmark interest rate by a quarter point to 1 percent when policy makers meet tomorrow, according to 58 economists in a Bloomberg survey.
Asian Strength
Asian economies are withstanding Europe’s debt crisis so well that some investors are positioning for rating upgrades in the region. Five-year credit-default swaps for China, South Korea, Indonesia, Malaysia, the Philippines and Thailand climbed an average 63 basis points to 161 this year, while contracts for 17 eurozone countries, excluding Greece, jumped 118 to 301.
The Markit iTraxx Asia index of 40 investment-grade borrowers outsideJapan fell one basis point to 194.5 basis points in Hong Kong, Credit Agricole SA (ACA) prices show.
Australia GDP
Australia’s third-quarter gross domestic product increased 1 percent from the previous three months, when it rose a revised 1.4 percent, a Bureau of Statistics report showed today. The result compared with the median of 24 estimates in a Bloomberg News survey for a 0.8 percent gain.
“The GDP data was strong and that is bullish for the Aussie,” saidThomas Harr, head of Asian currency strategy Standard Chartered Plc in Singapore. “It suggests that the economy is still doing quite well. I think it will take back some of the rate-cut expectations.”
More than three stocks rose for each that fell in the MSCI Asia Pacific Index. The equity benchmark sank 1.4 percent yesterday afterStandard & Poor’s said Germany, France and four other European nations may lose their AAA credit ratings.
Hong Kong’s Hang Seng Index rose 1 percent. Standard & Poor’s affirmed China’s sovereign ratings and said the outlook remains stable, citing the nation’s “exceptional” growth prospects, holdings of overseas assets and modest government indebtedness.
China Bonds
China’s improving credit conditions could support a rally in the country’s high-yield international bonds, according to Morgan Stanley. The central bank last week cut the amount of cash that banks must set aside as reserves for the first time since 2008 to support growth as Europe’s debt crisis hurts exports. Asian high-yield company bonds have lost 4.6 percent this year, according to HSBC’s Asian High-Yield Corporate index.
“We now see enough reasons to think that credit conditions may improve, at least temporarily,” strategists led by Hong Kong-based Viktor Hjort wrote in a Dec. 5 note.
Meiji Holdings Co. gained 5.1 percent, rebounding from yesterday’s 9.7 percent slump. The Japanese dairy-products producer said yesterday that it found cesium in baby milk power and that the levels of contamination posed no health risks.
S&P 500 futures increased to 1,260.30. The U.S. equity index has climbed 1.1 percent in the past two days, adding to the 7.4 percent surge last week. The yield on 10-year benchmark Treasuries was little changed at 2.09 percent.
The South Korean won rose 0.4 percent to 1,125.95 per dollar. The Kospi Index of shares advanced 0.9 percent. Finance Minister Bahk Jae Wan said today financial markets show signs of stabilizing as a result of global policy coordination.
Oil climbed 0.1 percent to $101.40 a barrel, near a three- week high. The European Union may have reached an agreement to ban oil imports from Iran, OPEC’s second-biggest crude producer, EU Energy Commissioner Guenther Oettinger said yesterday.
Three-month delivery copper rose as much as 0.9 percent to $7,906 per metric ton on the London Metal Exchange. Palladium for immediate delivery increased 0.8 percent to $675.50 an ounce.
(source: Bloomberg)
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07/12/2011 02:54:19 PM | 