BLBG:Yen Weakens to 28-Month Low as Asian Stocks, Commodities Advance
The yen weakened to the lowest since August 2010 amid speculation the Bank of Japan will inject more cash. Asian stocks and most commodities advanced as U.S. lawmakers arranged meetings before a budget deadline.
Japan’s currency dropped 0.4 percent to 86.44 per dollar as of 3:21 p.m. in Tokyo. The MSCI Asia Pacific Index gained 0.4 percent as the Nikkei 225 Stock Average climbed 0.7 percent to close with the biggest annual gain since 2005. Standard & Poor’s 500 Index futures were little changed. The S&P GSCI Index of 24 commodities added 0.3 percent as oil and copper rose.
Industrial output in Japan declined more than economists expected in November while consumer prices fell, bolstering the case for Prime Minister Shinzo Abe to push for further monetary easing. U.S. congressional leaders plan to meet with President Barack Obama today and House Republicans will convene Dec. 30 as lawmakers seek to avoid more than $600 billion in spending cuts and tax gains that will start in January.
“Policy expectations are behind the continuous decline in the yen,” said Noriaki Murao, managing director of the marketing group in New York at the Bank of Tokyo-Mitsubishi UFJ Ltd. “The Abe administration gives priority to measures against deflation and a stronger yen.”
The yen touched 86.64 earlier, the lowest level in more than 28 months. It lost 0.4 percent to 114.47 per euro. The currency has tumbled 15 percent this year, the biggest drop among the 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes.
Yen Forecasts
JPMorgan Chase & Co. revised its yen projections today, saying the currency will fall to 90 against the dollar in the second quarter next year. Its previous estimate was 83. Nomura Holdings Inc. also reduced its forecast to 90 per dollar for the same period from 85.
Government reports today showed Japan’s industrial output slid 1.7 percent last month from October, worse than all 27 estimates in a Bloomberg News survey that had a median forecast of a 0.5 percent decline. Consumer prices excluding fresh food fell 0.1 percent in November from a year earlier.
Abe’s cabinet is working on a plan to fight against a strong yen, the Nikkei newspaper said. Proposals include the use of currency intervention when needed, the paper said.
Finance Minister Taro Aso said he agreed with BOJ Governor Masaaki Shirakawa to strengthen cooperation between the government and the central bank. The BOJ next meets Jan. 21-22.
The Australian dollar touched the strongest level in 20 months against the yen, while the South Korean won gained 0.2 percent against the dollar after central bank figures showed the nation’s current-account surplus widened to an all-time high.
Equity Rally
About two stocks rose for each that fell on the MSCI Asia Pacific Index (MXAP) as the regional benchmark headed for a 14 percent gain this year, the most since 2010.
Canon Inc. (7751), the world’s biggest camera maker, increased 2.1 percent. Toshiba Corp. climbed 5 percent after it said it’s in talks to sell a stake in its Westinghouse Electric atomic-power unit. Fuji Heavy Industries (7270) Ltd., which makes Subaru branded vehicles, climbed to the highest close since July 1989. The company rose more than 130 percent this year and was the best performing Japanese stock on the MSCI Asia Pacific Index.
Australia’s S&P/ASX 200 Index rose 0.5 percent and Hong Kong’s Hang Seng Index added 0.1 percent, both set for their biggest year of gains since 2009. The Shanghai Composite Index was up 0.8 percent. The Nikkei 225 rose in its fourth day of gains for a 23 percent annual increase.
Benchmark stock indexes for all countries in the Asia Pacific except Sri Lanka have gained this year.
Budget Talks
Today is the final trading day of the year in Japan, South Korea, Taiwan, Indonesia, Thailand, Vietnam and the Philippines. Hong Kong, Australia, New Zealand and Singapore will trade for part of the day on New Year’s Eve.
“Central banks are going to keep interest rates low and provide more stimulus that will keep equity markets propped up as it has done this year,” said Kumar Palghat, founder of Kapstream Capital, which oversees at least $5.2 billion. “There will be some resolution to the fiscal cliff talks.”
Standard & Poor’s 500 Index futures gained as much as 0.4 percent earlier today after Senator Dick Durbin said Obama will meet with Democratic and Republican leaders of the House and Senate. U.S. stocks yesterday pared losses as House Republican leaders announced the Dec. 30 chamber meeting, its first Sunday session in more than two years.
Treasury Yields
Benchmark U.S. 10-year yields were little changed at 1.73 percent. Treasuries lagged behind stocks this year by the most since 2009, with equities returning eight times more than bonds.
U.S. government securities have returned 2 percent in 2012, based on Bank of America Merrill Lynch indexes. The MSCI All- Country World Index of stocks surged 17 percent including reinvested dividends, according to data compiled by Bloomberg.
Fifteen of the 24 raw materials tracked by the S&P GSCI gauge climbed, led by gains in sugar, oil and grains. Oil added 0.5 percent to $91.29 a barrel in New York while London-traded copper rose 0.3 percent to $7,936 a metric ton.
Wheat in Chicago rebounded from the lowest price in more than five months as rains delayed harvesting in Argentina, South America’s biggest producer. March-delivery futures rose 0.5 percent to $7.7575 a bushel from the low yesterday of $7.645. Soybeans gained 0.5 percent.
To contact Bloomberg News staff for this story: Chua Baizhen in Singapore at bchua14@bloomberg.net
To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net
