Stocks in Asia and Europe rebounded from three days of losses that left valuations at near the cheapest levels since 2008. Copper rose for the first time in five days, Treasury 10-year yields climbed above 2 percent, while the dollar and gold declined.
The MSCI Asia Pacific Index added 2.3 percent at 4:01 p.m. in Tokyo and the Stoxx Europe 600 Index rallied 1.9 percent. Standard & Poor’s 500 Index futures gained 1.2 percent, while Treasury 10-year yields added seven basis points. Copper and oil increased at least 1 percent. Gold slid 2 percent. The Dollar Index snapped a six-day advance, Australia’s currency jumped 1.1 percent and the yen climbed. The Swiss franc was at 1.2064 per euro after losing as much as 9.9 percent yesterday.
Equities are rebounding from a sell-off that has wiped out $2.5 trillion from global market values this month. Data today showed Australia’s economy expanded 1.2 percent last quarter. The Federal Reserve will release its Beige Book survey of U.S. economic conditions today, while President Barack Obama will address Congress tomorrow on his plan to boost job growth.
“It’s the right time to pick up some quality stocks,” Pu Yonghao, Hong Kong-based chief investment strategist at UBS AG, said in a Bloomberg Television interview. “Valuations look attractive but nobody knows if we’re at the bottom,” he said in a Bloomberg Television interview.
Stocks Rebound
The Stoxx 600 retreated yesterday to the lowest level since July 2009 and is trading at about 10.4 reported earnings, near the cheapest since December 2008. Germany’s DAX Index rose 2.5 percent, snapping a four-day, 10 percent plunge.
Valuations on MSCI’s Asia Pacific Index fell to 11.7 times estimated profits yesterday, the lowest since at least November 2008. Japan’s Nikkei 225 (NKY) Stock Average rallied 2 percent after retreating yesterday to its lowest level since April 2009. South Korea’s Kospi Index jumped 3.8 percent, Taiwan’s Taiex Index added 1.9 percent, while Australia’s S&P/ASX 200 Index climbed 2.7 percent.
“Asia was already quite cheap and after the drop in August, it looks even cheaper,” Wilfred Sit, Asia chief investment officer for Baring Asset Management, said in a Bloomberg Television interview from Hong Kong. “Over the long term, Asia’s fundamentals remain very strong but there’s still a possibility of macro shocks.”
Hyundai Motor Co. (005380) rallied 3.7 percent after Chang Kyun Han, president of its European operations, said the company aims to increase its European market share to 3 percent this year from the 2.8 percent it had in the first half by selling more than 400,000 vehicles. Hynix Semiconductor Inc. and Elpida Memory Inc. jumped more than 7 percent each, pacing gains among exporters.
Obama’s Plan
S&P 500 futures expiring in September indicate the U.S. stocks gauge may rebound from its three-day, 4.4 percent slump. The index fell as much as 2.9 percent yesterday before closing 0.7 percent lower. A private report showed U.S. services industries grew faster than the median forecast of economists in a Bloomberg survey.
Obama plans to propose sparking job growth by injecting more than $300 billion into the economy next year, mostly through tax cuts, infrastructure spending and direct aid to state and local governments, Bloomberg News reported. The President will address Congress tomorrow amid unemployment that remains at 9.1 percent more than two years after the recession’s official end.
Chicago Fed President Charles Evans is scheduled to speak in London today, while Chairman Ben S. Bernanke will speak on the U.S. economic outlook tomorrow in Minneapolis. Treasury 10- year notes fell for the first time in a week, sending yields up to 2.05 percent.
Dollar Weakens
The Dollar Index, which tracks the U.S. currency against those of six trading partners, fell 0.6 percent after climbing 3 percent in the previous six sessions amid signs growth in the world’s largest economy is stalling and on concern Europe’s sovereign-debt crisis is worsening. The dollar weakened to $1.4082 per euro from $1.3998 yesterday.
“The dollar tends to weaken when appetite for risk increases because it’s a currency that’s preferred when people are risk averse,” said Koji Fukaya, chief currency strategist in Tokyo at Credit Suisse Group AG.
The yen strengthened 0.5 percent to 77.27 per dollar after the Bank of Japan refrained from adding stimulus, curbing speculation it will follow Switzerland in taking steps to stem currency gains. The Swiss National Bank said yesterday “it will no longer tolerate a euro-franc exchange rate below the minimum rate of 1.20 francs” and that it’s “aiming for a substantial and sustained weakening of the franc.”
Australia’s GDP
The Aussie strengthened after today’s gross domestic product report. The economy was forecast to have expanded 1 percent in the second quarter from the previous three months, according to the median forecast of 25 estimates in a Bloomberg News survey.
The cost of protecting Asia-Pacific corporate and sovereign bonds from default dropped, with the Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan decreasing 4 basis points to 160.5 basis points, Royal Bank of Scotland Group Plc prices show. The index is on course for its first decline since Sept. 1, according to data provider CMA, which is owned by CME Group Inc. and compiles credit-default swap prices quoted by dealers in the privately negotiated market.
The Markit iTraxx Japan index decreased 4 basis points to 151, Deutsche Bank AG prices show, while the Markit iTraxx Australia index declined 3 basis points to 177 basis points, according to Credit Agricole CIB. Both indexes are also headed for the first decline since Sept. 1, CMA prices in New York show.
Copper for three-month delivery rose 1.1 percent to $9,031 a metric ton on the London Metal Exchange, following a four-day, 3.7 percent loss. Nickel climbed 2.4 percent, also gaining for the first time in five days. Immediate-delivery gold dropped 2 percent to $1,838.13 an ounce, retreating for a second day. Bullion reached an all-time high of $1,921.15 yesterday.
Crude gained 1.2 percent to $87.02 a barrel in New York, rebounding from the lowest level in more than a week. October futures had dropped 3.2 percent in the previous two days.
To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.net
To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net
