BLBG:Yen Weakens on Japan Stimulus Bets as U.S. Futures, Oil Advance
The Japanese yen weakened to the lowest since April 2011 amid expectations Japan’s new government will push for more cash infusions to bolster the economy. Oil and U.S. stock-index futures advanced.
The yen retreated 0.6 percent to 85.31 per dollar as of 6:20 a.m. in New York and has fallen against all but nine currencies this year. Crude climbed 0.7 percent and copper added 0.7 percent. Standard & Poor’s 500 Index futures rose 0.2 percent. Japanese stocks advanced to nine-month highs and bonds declined with the parliamentary approval of Shinzo Abe as the country’s new premier. Trading in Treasuries is closed until later today in New York.
Abe, whose Liberal Democratic Party won a landslide victory in the Dec. 16 election, appointed a cabinet today, including Taro Aso as finance chief. BOJ board members said the economy is weakening and one suggested open-ended asset purchases, minutes of last month’s policy meeting showed. Democrat and Republican lawmakers in the U.S. plan to convene tomorrow for budget talks aimed at avoiding more than $600 billion in tax gains and spending cuts scheduled to take effect Jan. 1, known as the fiscal cliff.
“The BOJ minutes from the November 19-20 policy meeting provided yet another excuse to sell the yen overnight,” Gareth Berry, a foreign-exchange strategist at UBS AG in Singapore, wrote in a client note. “Having taken a mostly passive interest in the yen over the past few years, the policy board now seems willing to adjust its policy stance in a conscious effort to weaken the currency.”
Monthly Decline
The yen weakened to as low as 85.48 per dollar, and was poised to complete a third monthly decline versus the greenback, its longest losing streak since August 2008. It slid against its 16 major counterparts, dropping as much as 1 percent to a 16- month low of 112.84 per euro, before retracing to 112.73.
Standard & Poor’s 500 Index futures expiring in March rose to 1,422.4 after they started trading at 11 a.m. London time.
Oil rose in New York before a Dec. 28 government report that, according to a Bloomberg survey, will show U.S. stockpiles declined last week to the lowest in 10 weeks. Crude climbed to $89.19 a barrel, trimming this year’s drop to 9.8 percent.
Copper futures rose to $3.57 a pound in New York, heading for a 3.8 percent gain in 2012. Workers at BHP Billiton Ltd. (BHP)’s Escondida mine in Chile, the world’s largest, turned down a wage proposal, threatening a stoppage.
Bond Markets
Trading in Treasuries was closed in the U.K. and Japan, according to the Securities Industry and Financial Markets Association. It will open as usual in New York after being shut yesterday around the world for Christmas, according to the association’s website. European and U.K. bond markets are closed all day.
The MSCI Asia Pacific Index (MXAP) increased 0.2 percent, trading about 1 percent from its highest close for the year as almost two stocks rose for each that fell. The benchmark gained 13 percent this year.
Japan’s Nikkei 225 (NKY) Stock Average jumped 1.5 percent and the Topix Index, a broader gauge of stocks, rose 1.2 percent, both closing at the highest in about nine months. Markets in Hong Kong, Australia and New Zealand remained closed for the holidays, while others resumed trading.
Nissan Motor Co. (7201), a carmaker that derives almost 80 percent of sales overseas, gained 2.1 percent in Tokyo. Hitachi Ltd. (6501) rose 2.1 percent after its president said the company plans to double its operating margin.
Gains in Japanese stocks were initially limited as 127 companies in the 1,678 member Topix went ex-dividend, meaning investors who buy the shares today won’t qualify for a year-end payout.
Foreign Buying
“Market expectations are on the rise for the new government as it beefs up efforts to beat deflation and revive the economy,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc. “I expect overseas investors to buy shares as they return from the Christmas holiday.”
Abe said he’ll consider revising the law governing the BOJ if the central bank fails to raise its inflation target to 2 percent from 1 percent at its January meeting. He spoke during a Fuji Television program on Dec. 23.
The new premier struck an agreement with his coalition allies in the New Komeito Party on a policy package for “bold monetary easing.” Board members of the central bank pledged to continue with “powerful easing,” according to the minutes, released today.
BOJ Easing
An unnamed member said that open-ended easing until the BOJ achieves its 1 percent inflation goal is an option, the minutes showed. The BOJ’s 76 trillion yen ($890 billion) program that buys securities ranging from government bonds to stock funds will expire at the end of next year.
The yield on Japan’s benchmark 10-year note gained 2 basis points to 0.794 percent, according to Japan Bond Trading Co., the nation’s largest interdealer debt broker. The rate is the highest since Nov. 1.
Japan’s consumer prices excluding fresh food probably slid 0.1 percent in November from a year earlier, according to the median estimate of economists in a Bloomberg News survey before data due on Dec. 28. The so-called core inflation rate has fallen an average of 0.2 percent every month in the past decade.
South Korea’s won rose 0.1 percent to near a 15-month high against the dollar as a report showed consumer confidence failed to improve in the country. The sentiment index was at 99 in December, unchanged from November, indicating pessimists continue to outnumber optimists, the Bank of Korea said today.
Money managers outside the country bought more shares than they sold every day this month, according to Korea Exchange, bringing the total of net purchases to $3.3 billion in December.
“Overseas investors’ net purchases of Korean stocks and cross trades of selling the yen and buying the won are the biggest issues in the currency market preventing the won from weakening,” said Byeon Ji Young, a Seoul-based currency analyst at Woori Futures Co.
To contact the reporter for this story: Paul Armstrong at parmstrong10@bloomberg.net
To contact the editor responsible for this story: Stuart Wallace at Swallace6@bloomberg.net
