BLBG:Yen Falls to Lowest Since ’10 as Japan Stocks Jump; Aussie Drops
The yen fell to the lowest level in almost three years, Japanese bond yields slid and the nation’s stocks rallied on speculation Prime Minister Shinzo Abe will nominate Haruhiko Kuroda as central bank governor. European stock index futures rose, while the Australian dollar weakened.
The yen dropped 0.9 percent to 94.24 per dollar at 3:18 p.m. in Tokyo, after touching its lowest level since May 2010. The Nikkei 225 Stock Average (NKY) surged 2.4 percent to its highest level since September 2008. The yield on Japan’s five-year note fell one basis point to 0.12 percent, the lowest since 2000. Euro Stoxx 50 Index futures climbed 0.7 percent, while Standard & Poor’s 500 Index contracts were little changed. The Aussie lost 0.4 percent versus the dollar. Copper gained 0.7 percent.
Abe is likely to call on Asian Development Bank President Kuroda, who said this month there is “substantial room” for easing, and Kikuo Iwata as his deputy, according to a government official with knowledge of the discussions. China’s factory output is growing at the slowest pace in four months, a private survey showed today. Italians are voting in an election with initial estimates of the result due after 3 p.m. in Rome.
“For foreign currency investors, Kuroda is a very credible choice,” said Rajeev De Mello, who manages more than $8 billion as the Singapore-based head of Asian fixed-income assets at Schroder Investment Management Ltd. “We can establish a range between 95 and 100” for the yen in the coming months, as long as the nominations go through and other BOJ board members can be convinced, he predicted.
Bernanke Testimony
Investors are awaiting U.S. data this week including the Institute for Supply Management’s factory index, durable goods orders, household spending, the S&P/Case-Shiller index of home prices and fourth-quarter gross domestic product. Federal Reserve Chairman Ben S. Bernanke is due to testify before lawmakers tomorrow and the next day.
The yen declined against all 16 major peers, and weakened 1.1 percent to 124.56 against the euro.
Appointing Kuroda may help Abe follow through on a pledge to counter more than a decade of deflation, a prospect that has already driven down the yen and triggered a stock rally. Governor Masaaki Shirakawa and two deputy governors will step down next month.
The Japanese currency has dropped 7 percent this year, the biggest loser among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The pound has seen the second-biggest decline, falling 5.8 percent.
U.K. Rating
The British currency fell 0.2 percent against the dollar today after touching its lowest level since July 2010. Moody’s Investors Service stripped the U.K. of its Aaa status on Feb. 22. Chancellor of the Exchequer George Osborne said he won’t give in to opposition calls to drop austerity policies after Moody’s decision.
The Australian dollar weakened against all its major peers apart from the yen and was at $1.0282 after the gauge of Chinese manufacturing came in below economists’ estimates. China is Australia’s biggest trading partner.
The preliminary reading of a Purchasing Managers’ Index was 50.4 in February, according to a statement from HSBC Holdings Plc and Markit Economics today. That compares with the 52.3 final reading for January and the 52.2 median estimate of 11 analysts surveyed by Bloomberg News. A number above 50 indicates expansion.
Today’s report may damp optimism that an economic rebound is gaining traction following a seven-quarter slowdown and the weakest annual expansion in 13 years.
Japanese Exporters
About 11 stocks rose for every seven that fell on MSCI’s Asian Pacific Index (MXAPJ), with telecommunication and financial companies. Australia’s S&P/ASX 200 Index climbed 0.8 percent, while South Korea’s Kospi and Taiwan’s Taiex Index both declined by 0.5 percent. Hong Kong’s Hang Seng Index added 0.2 percent.
Toyota Motor Corp. (7203), a carmaker that gets a quarter of its sales in North America, advanced 1.4 percent in Tokyo and Canon Inc. rallied 1.8 percent. A weaker yen boosts exporters’ earnings. Sun Hung Kai Properties Ltd. slid 2.2 percent, leading losses by Hong Kong developers after the government doubled sales taxes on property costing more than HK$2 million ($258,000).
U.S. Commerce Department data on Feb. 26 may show new-home sales climbed in January, according to a Bloomberg survey. U.S. GDP probably expanded at a 0.5 percent annual rate in the fourth quarter, compared with the Commerce Department’s initial estimate on Jan. 30 that the economy contracted by 0.1 percent. The data will be released on Feb. 28.
To contact the reporters on this story: Richard Frost in Hong Kong at rfrost4@bloomberg.net; Adam Haigh in Sydney at ahaigh1@bloomberg.net
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net
