BLBG:Asia Stocks, Oil Rise on U.S. Budget Bets; Yen Near 20-Month Low
Asian stocks rose to a nine-month high, led by Japanese shares, and commodities gained on signs of progress in U.S. budget talks. The yen neared a 20-month low.
The MSCI Asia Pacific Index (MXAP) added 0.5 percent as of 3:01 p.m. in Tokyo, headed for the highest close since March 2. The Nikkei 225 Stock Average climbed 1 percent and Standard & Poor’s 500 Index futures advanced 0.2 percent. U.S. and Japanese government bonds fell. The S&P GSCI Index of raw materials gained 0.4 percent. The yen slid 0.2 percent to 84.04 per dollar, near the weakest level since April 2011.
Stocks extended gains after President Barack Obama proposed a budget plan that would cut about $1.2 trillion in federal spending and raise a similar amount in taxes, according to a person familiar with the talks. The Nikkei 225 closed at an eight-month high before the Bank of Japan starts a two-day policy meeting tomorrow amid calls for more monetary easing by incoming Prime Minister Shinzo Abe.
On the U.S. budget, “we are now getting some signs at least that negotiations are continuing, and that is a positive development,” said Belinda Allen, a senior investment analyst at Colonial First State Global Asset Management in Sydney, which oversees about $145 billion. “There’s a view that the Bank of Japan will become a little more aggressive in terms of asset purchases and really trying to depreciate the yen.”
The MSCI Asia Pacific Index has climbed 12 percent this year, headed for its first annual gain since 2010, as central banks in the U.S., Europe and Japan stepped up asset purchases that spurred demand for higher-yielding assets. The S&P 500 and the Stoxx Europe 600 Index both advanced about 14 percent.
LDP Returns
Australia’s S&P/ASX 200 (AS51) rose 0.5 percent today and South Korea’s Kospi increased 0.5 percent. The Shanghai Composite Index touched a five-month high after after China’s commerce ministry said the economy will probably rebound further in 2013 and Goldman Sachs Group Inc. raised growth forecasts for the nation.
The Nikkei 225 has gained almost 9 percent in the past month on bets the Liberal Democratic Party, which returned to power in last weekend’s elections, will spend more to boost the economy and pressure the central bank to step up bond purchases. Shares of Nomura Holdings Inc., Japan’s biggest brokerage, jumped 6.4 percent today.
The weaker yen gave a lift to Japanese exporters. Canon Inc., the world’s biggest camera maker, climbed 3.3 percent and Toyota Motor Corp. gained 2.8 percent percent. The Japanese currency has lost 12 percent this year, the worst performance among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes.
BOJ Bets
“There’s a chance that they’ll come to a conclusion about the U.S. fiscal cliff before Christmas,” said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co. “Because of policy talks between the LDP and the Bank of Japan as well as news of the inclusion of a large extra budget, the market expectations for the new government are likely to last more than a day.”
Tokyo Electric Power Co. soared 17 percent after jumping 33 percent yesterday, set for its biggest two-day gain in 18 months, amid speculation the LDP will allow the restart of nuclear reactors shut following meltdowns at a power plant. Korea Aerospace Industries Ltd. dropped 3.2 percent in Seoul as shareholders abandoned the sale of a controlling stake in the planemaker after failing to get enough bids.
U.S. Budget
Obama’s plan would change the inflation measure used to calculate cost-of-living increases for Social Security and raise the income threshold to $400,000 -- from an earlier proposal of $250,000 -- above which tax rates would increase, said the person. The deal would also raise the U.S. debt limit for two years and then change the rules to eliminate the need for congressional approval.
Obama and Boehner met at the White House yesterday with days left to avert more than $600 billion in automatic spending cuts and tax increases that go into effect next year if a budget deal isn’t reached.
Treasuries fell, sending benchmark yields to the highest in almost two months. The 10-year rate rose one basis point to 1.78 percent, the highest since Oct. 26. Japan’s 10-year government bond yield increased two basis points to a one-month high of 0.76 percent.
Oil rose for a third day, with futures for January delivery advanced as much as 42 cents to $87.62 in electronic trading on the New York Mercantile Exchange. An Energy Department report tomorrow may show crude supplies shrank last week while fuel stockpiles climbed, according to a Bloomberg News survey. Crude has fallen 11 percent in 2012 amid the U.S. shale gas boom.
Nickel gained 0.7 percent in London. Cash silver climbed 0.5 percent to $32.4488 an ounce and is 17 percent higher this year. The best performing precious metal this year fell to $32.0612 yesterday, the cheapest since Nov. 8.
To contact the reporters on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net; Adam Haigh in Sydney at ahaigh1@bloomberg.net
To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net
