BLBG:Europe Equity Futures, Asia Stocks, Oil Gain on Fed Easing Sign
European equity futures and Asian stocks rose after Federal Reserve policy makers said more monetary easing may be needed and economic growth in Japan and Singapore exceeded estimates. Oil rebounded from a six-month low, while the Dollar Index (DXY) snapped a record rally.
Euro Stoxx 50 Index futures advanced 0.5 percent as of 7:10 a.m. in London and contracts for the Standard & Poor’s 500 Index gained 0.6 percent. The MSCI Asia Pacific Index climbed 0.9 percent, the biggest increase in almost a month. Crude oil in New York rose 0.9 percent, gold added 0.9 percent and copper gained 1.5 percent. The dollar fell 0.2 percent to $1.2741 per euro, weakening against all 16 major counterparts. The Australian and New Zealand dollars strengthened 0.4 percent.
Minutes from the last Federal Reserve meeting showed some policy makers said further easing may be needed should the U.S. economy slow. Industrial output in the U.S. rose last month at the fastest pace since December 2010 and Japan’s gross domestic product grew an annualized 4.1 percent in the first quarter, official figures show. Singapore’s non-oil domestic exports increased 8.3 percent from a year earlier in April.
“The Fed is giving a signal to the market that there’s no need for panic, by assuring it will do something before things get really bad,” said Koji Toda, chief fund manager at Resona Bank Ltd. in Tokyo, which oversees about $68 billion. “Stocks have fallen too quickly recently. They’re at a level we should buy once we see some signs of improvement in Europe.”
Greek Elections
More than $3 trillion of global stock market value has been erased this month as concern Greece will exit the euro curbed demand for riskier assets and economic data from China missed estimates. Greece will schedule fresh elections today after political leaders, split over austerity measures tied to a European Union-led bailout, failed to form a coalition government following a May 6 vote.
The MSCI Asia Pacific index has fallen 11 percent since reaching its 2012 high on Feb. 29 and is now up 1.3 percent from where it started the year. About three stocks rose for each that fell in the Asian benchmark today. Japan’s Nikkei (NKY) 225 Stock Average rallied 0.9 percent, Hong Kong’s Hang Seng Index gained 0.7 percent and Taiwan’s Taiex (TWSE) added 1.7 percent.
Korea Gas Corp. (036460), the world’s biggest liquefied natural gas importer, jumped 6.4 percent in Seoul after its Italian partner reported more gas discoveries in Mozambique. Li & Fung Ltd. (494), a supplier of toys and clothes to Wal-Mart Stores Inc. (WMT) that gets 60 percent of sales in the U.S., climbed 1.8 percent.
Copper, Zinc
The Dollar Index, a measure of the currency against six major peers, fell for the first time in 14 days, boosting the appeal of commodities as alternative assets. Copper in London traded at $7,762.25 a metric ton, up from a four-month low of $7,625 yesterday, as technical signals indicated the metal was oversold. Zinc climbed 1.1 percent and lead rose 0.6 percent. Wheat in Chicago gained 1.0 percent and silver jumped 1.9 percent.
“Further stimulus from the Fed will be positive for the stocks and commodity markets,” said Junichi Ishikawa, an analyst in Tokyo at IG Markets Securities Ltd. “The Australian and New Zealand dollars have fallen too rapidly and we’re seeing some buying back in these currencies.”
The Australian and New Zealand dollars rebounded from five- month lows amid speculation recent declines were excessive. South Korea’s won and Indonesia’s rupiah rebounded from their weakest levels in at least three months after policy makers signaled they may intervene to stem losses.
Treasuries fell, sending 10-year yields up three basis points to 1.79 percent, before the U.S. sells $13 billion of inflation-protected notes today. The rate slid to 1.75 percent yesterday, approaching the all-time low of 1.67 percent.
The cost of insuring Asia-Pacific bonds from default decreased, according to traders of credit-default swaps. The Markit iTraxx Asia index (MXAP) of 40 investment-grade borrowers outside Japan decreased one basis point to 195, Royal Bank of Scotland Group Plc prices show. The index is poised to fall for the first time in five business days, after rising to as much as 196.3 yesterday, its highest since Jan. 18, CMA prices show. A basis point is 0.01 percentage point.
To contact the reporter on this story: Sungwoo Park in Seoul at spark47@bloomberg.net
To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net
