BLBG:Asia Stocks, Won Gain As Japan Trade Rises; Euro Slips
Asian stocks rose to a one-month high and the won strengthened for a sixth day after Japanese trade data signaled stronger demand in the region and before the Federal Reserve announces whether it will take new steps to boost the economy. The euro and copper declined.
The MSCI Asia Pacific (MXAP) Index rose 1 percent at 2:11 p.m. in Tokyo, while Standard & Poor’s 500 Index futures dropped less than 0.1 percent. South Korea’s currency gained 0.5 percent to 1,151.15 per dollar in its longest rally since January. The euro fell 0.1 percent to 100.01 yen and New Zealand’s dollar lost 0.4 percent to 79.54 U.S. cents. Copper in London fell 0.3 percent to $7,584.25 a metric ton.
Japanese exports gained more than expected in May and its energy imports surged after the world’s third-biggest economy shut nuclear plants following meltdowns at a facility in Fukushima. The U.S. central bank is expected to announce added stimulus measures as soon as this week’s meeting, according to 12 of the 21 primary dealers who trade with the Fed. The euro’s weakness comes before Spanish bond auctions tomorrow, which may cast doubt over the country’s funding capabilities.
“I did not expect that exports are this strong given the current world economic situation,” said Takao Goto, a market analyst at SBI Securities Co., Japan’s biggest online security brokerage firm. “There are still concerns that the European issue becomes a drag on the U.S. and Chinese economy and weigh on Japan’s exports. We still cannot be too optimistic.”
More than three stocks rose for every one that fell on the MSCI’s Asian index, which is set to close at the highest level since May 15. Consumer and health-care stocks led gains among the 10 sectors measured on the gauge.
Trade Deficit
More than $5 trillion has been erased from global equities since March amid concern economic growth is slowing in the U.S. and China, and as Europe’s debt crisis intensified with Spain’s borrowing cost rising to a record.
South Korea’s Kospi index rose 0.6 percent. Hong Kong’s Hang Seng Index increased 0.7 percent and China’s Shanghai Composite Index was little changed. Japan’s Nikkei 225 Stock Average gained 1.2 percent, and the Topix Index rose 1.8 percent, with all 33 industry groups in the measure climbing.
Japan’s trade deficit was 907.3 billion yen ($11.5 billion) in May, the finance ministry said today. The median economists estimate in a Bloomberg News survey was for a 544.4 billion yen shortfall. Exports rose 10 percent from a year earlier, while imports climbed 9.3 percent, both wider than economists had estimated.
“This is one of those big, long-term shifts,” said Robert Sinche, global head of currency strategy at Royal Bank of Scotland Plc. “Japan is quickly turning from a persistent surplus country on the trade side to a deficit country. Eventually, that will wear down on its current-account surplus and get some weakening of the yen.”
News Corp.
Consolidated Media Holdings Ltd. (CMJ) surged 9.4 percent in Sydney in its biggest gain in almost three years after it said News Corp., the media company controlled by Rupert Murdoch, offered a buyout. News Corp.’s Australia-listed shares rose 0.7 percent.
Sumitomo Mitsui Trust Holdings Inc. (8309), Japan’s fourth-biggest bank by market value, gained 4.7 percent in Tokyo after a company official said it plans to expand overseas loans by 32 percent this year.
Sony Corp. (6758), Japan’s biggest consumer electronics maker, jumped 3.5 percent. Renesas Electronics Corp. (6723), the world’s largest maker of microcontrollers used in cars, added 1.9 percent after saying its partnership with Taiwan Semiconductor Manufacturing Co. (2330) will help it boost market share.
VIX Decline
The MSCI Asia Pacific Index lost 10 percent through yesterday from this year’s highest level in February, leaving the gauge trading at 1.3 times book value, compared with 2.1 times for the S&P 500 and 1.4 times for the Stoxx 600, according to data compiled by Bloomberg. A number below one means companies can be bought for less than value of their assets.
The largest drop in the Chicago Board Options Exchange Volatility Index since August brought the gauge to its cheapest level of the year, a sign of increasing confidence among traders that the Fed will take action again to spur growth.
The central bank, which began a two-day meeting yesterday, will extend its so-called Operation Twist program, according to JPMorgan Chase & Co. and Jefferies & Co. It involves selling short-term debt and buying longer-term bonds. A more aggressive response could be warranted if the Fed sees high costs in an economic slowdown.
QE Chances
“I don’t think there will be another round of quantitative easing, but I think they’ll extend Operation Twist,” said Yoshihisa Okamoto, who helps oversee the equivalent of $34 billion at Mizuho Asset Management Co. “China has shifted toward an easing posture except in the real estate sector.”
China’s fiscal policy should be “really proactive” and macroeconomic policies readjusted in the following months to sustain faster growth, the China Daily cited a proposal from the Standing Committee of the Chinese People’s Political Consultative Conference National Committee as saying.
Spain is due to sell tomorrow debt maturing in 2014, 2015 and 2017. While the nation’s 10-year yields eased yesterday, they remain above the 7 percent level that pushed Greece, Ireland and Portugal to seek rescue packages.
The so-called kiwi declined after a report today by Statistics New Zealand showed the nation’s current-account shortfall in the three months through March widened to 4.8 percent of gross domestic product, up from a revised 4.2 percent in the previous quarter.
Bond Risk
The cost of insuring Asia-Pacific corporate and sovereign bonds from non-payment decreased, according to traders of credit-default swaps.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan dropped 4 basis points to 176 basis points as of 8:24 a.m. in Hong Kong, according to Credit Agricole SA. The gauge is set for its lowest close since May 8, according to data provider CMA.
Corn in Chicago was little changed at $5.63 a bushel after earlier falling as much as 0.5 percent. jumping 11 percent in the previous two days on concern that hot, dry weather will curb yields in U.S. growing areas. Gold for immediate delivery rose 0.1 percent to $1,620.70 an ounce.
To contact Bloomberg News staff for this story: Chua Baizhen in Beijing at bchua14@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
