Asian stocks, the euro and won rose to their highest levels this month, extending a worldwide rally, on optimism the global economy will avoid a second recession. Oil rebounded from a four-week low, copper climbed for a fifth day, and concern about corporate debt defaults waned.
The MSCI Asia Pacific Index advanced 1.8 percent to 115.32 as of 3:15 p.m. in Tokyo. The euro strengthened to as much as $1.2688 and the won gained 0.6 percent. Oil climbed to $74.57 a barrel. Standard & Poor’s 500 Index futures fell 0.2 percent and those for the Euro Stoxx 50 increased 1 percent.
The International Monetary Fund raised its forecast for global growth after a stronger-than-expected first half. U.S. equities surged yesterday by the most in almost six weeks after retail sales climbed and banks rose on speculation European tests will show narrower losses than some analysts estimated. The MSCI World Index has declined 14 percent from this year’s high on April 15 on concern Europe’s debt crisis and China’s steps to cool its economy will derail a recovery.
“I doubt we’ll have another global recession,” said Masayuki Kubota, a fund manager at Tokyo-based Daiwa SB Investments Ltd., which oversees $51 billion. “People are very sensitive to economic data from the U.S. If something good comes out, market sentiment easily rebounds. I’m buying sectors which were sold on excessive pessimism.”
Japan’s Nikkei 225 Stock Average jumped 2.8 percent, the biggest increase among equity indexes in the Asia-Pacific region. Australia’s SPX/ASX 200 Index gained 2.2 percent and Hong Kong’s Hang Seng Index advanced 1.5 percent.
IMF Boosts Forecast
The world economy will expand 4.6 percent in 2010, the biggest gain since 2007, compared with an April projection of 4.2 percent, the Washington-based IMF said in revisions today to its World Economic Outlook. Growth next year is projected to be 4.3 percent, unchanged from the April forecast.
European Union banking regulators have told lenders their planned stress tests may assume a loss of about 17 percent on Greek government debt and 3 percent on Spanish bonds, according to two people briefed on the talks, half of the worst-case scenario estimated by JPMorgan Chase & Co.
A U.S. retail-trade group said yesterday that sales were growing at the fastest pace since 2006, easing concern that a slump in consumer confidence will scuttle the economic recovery.
The market value of stocks worldwide, as measured by the Bloomberg World Exchange Market Capitalization Index, tumbled 15 percent from a 2010 high in April to July 5, erasing $7.6 trillion, on slower U.S. growth, and concern over Europe’s debt crisis and China’s steps to cool its economy.
Today, European Central Bank policy makers will meet, and the U.S. will report initial jobless claims.
Deterioration Brake
“The general consensus was that the U.S. economy was going to deteriorate and the good retail sales put a brake on that view,” said Mitsushige Akino, who oversees $450 million at Tokyo-based Ichiyoshi Investment Management Co.
Toyota Motor Corp., the world’s largest automaker, gained 2.6 percent in Tokyo and was the top contributor to the MSCI Asia Pacific Index. BHP Billiton Ltd., the biggest mining company worldwide and Australia’s No. 1 oil producer, rose 1.8 percent in Sydney and JX Holdings Inc., Japan’s biggest copper producer, soared the most in the Nikkei 225 as the metal climbed.
Advantest Corp., the world’s No. 1 maker of chip-testing equipment, leapt 6 percent after the Nikkei newspaper said semiconductor demand in Asia is rising. Posco, South Korea’s No. biggest steelmaker, gained 3.1 percent and was the country’s most-active stock by value. China Merchants Bank Co. rose 2.7 percent in Hong Kong after forecasting higher profit.
Euro, Swaps, Commodities
The euro gained to the strongest level in seven weeks versus the dollar after two people familiar with the matter said the Committee of European Banking Supervisors may unveil its review process for stress tests before results due July 23. The Australian dollar rose to a one-week high versus the yen after government data showed employers added three times more jobs than economists expected.
The cost of protecting Asia-Pacific bonds from non-payment fell to the lowest level in two weeks. The Markit iTraxx Asia index of credit-default swaps on 50 investment-grade borrowers outside Japan dropped 9.5 basis points to 130.5 basis points, according to Credit Agricole CIB. That’s the lowest since June 23, according to CMA DataVision in New York.
Oil climbed to the highest level in a week, gaining 0.6 percent, following the retail-sales data and a report showing a drop in crude inventories in the U.S., the world’s largest energy consumer.
‘Boost to Sentiment’
“The retail sales numbers in the U.S., after a whole host of disappointing data recently, provided a boost to sentiment,” said Toby Hassall, a commodity analyst at CWA Global Markets Pty in Sydney. “Considering the falls we’ve had in equity markets and other asset markets, there are those looking at these crude price declines and viewing them as excessive.”
Copper in London climbed for a fifth day, driving industrial metals higher, as equities rallied and dwindling inventories signaled steady demand. Copper for three-month delivery gained as much as 1.2 percent to $6,725 a metric ton on the London Metal Exchange. Stockpiles tracked by the London Metal Exchange dropped for a 14th session yesterday to the lowest level since Nov. 30.
Gold climbed on speculation that the metal’s decline to the lowest level in six weeks is prompting some investors to increase holdings. Bullion for immediate delivery advanced 0.2 percent to $1,204.73 an ounce, rising for a second day. The metal fell to $1,185 yesterday, the lowest price since May 24.
To contact the reporters on this story: Nicolas Johnson in Tokyo at nicojohnson@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net.
