BLBG:Asian Stocks Rise, Oil Climbs on U.S. Budget Talks; Dollar Falls
Asian stocks rose the most in a month, commodities gained and the won strengthened after U.S. President Barack Obama expressed confidence that he and Congress would reach a budget agreement. The dollar fell.
The MSCI Asia Pacific Index (MXAP) advanced 0.9 percent as of 2:28 p.m. in Tokyo. Japan’s Topix Index (TPX) climbed 1.4 percent. Standard & Poor’s 500 Index futures added 0.3 percent, while contracts on the FTSE 100 Index climbed 0.8 percent. Oil increased 1.1 percent in New York and copper gained 0.9 percent in London. South Korea’s won rallied 0.5 percent against the dollar, while the dollar weakened against 15 of its 16 major counterparts.
Obama, before starting a three-nation trip in Asia, began a new round of deficit-reduction talks with top Republicans and Democrats in a bid to avoid automatic tax increases and spending cuts that threaten to throw the country into a recession. European finance ministers are due to meet in Brussels tomorrow as they aim to craft a plan for Greece’s next aid payout. Data today may show sales of previously owned U.S. homes stayed at close to a two-year high last month.
“Investors appear to be increasing their bets that the worst-case scenario for the U.S. fiscal situation will be averted,” Kim Dae Young, a Seoul-based fund manager at KB Asset Management Co., which manages about $27 billion in assets, said by phone today.
All 10 industry groups rose in the MSCI Asia Pacific Index, which fell 1.2 percent last week as investors fixated on the U.S. budget. The Topix added to a two-day, 4 percent advance amid speculation national elections next month will hand power to an opposition party pushing for more stimulus. South Korea’s Kospi Index rallied 0.9 percent, while the Shanghai Composite Index dipped below 2,000 for the first time in eight weeks.
Fiscal Cliff
Ping An Insurance (Group) Co. (2318), China’s second-biggest insurer, sank 3.2 percent in Hong Kong. HSBC Holdings Plc said it’s in talks to sell its stake in the company, which was worth $9.5 billion before today’s open. HSBC gained 0.7 percent.
The S&P 500 Index rose 0.5 percent on Nov. 16, the first increase in four days, after House Speaker John Boehner said talks with Obama were constructive and he would accept an increase in government revenue if coupled with spending cuts.
“I am confident we can get our fiscal situation dealt with,” Obama said at a news conference in Bangkok yesterday, spurring optimism lawmakers would reach an agreement to avoid a $607 billion deficit-cutting package known as the fiscal cliff.
Credit Defaults
The cost of insuring Asia-Pacific corporate and sovereign bonds from default dropped, with the Markit iTraxx Asia index of credit-default swaps linked to 40 investment grade borrowers outside Japan sliding four basis points to 126, Royal Bank of Scotland Group Plc prices show. The benchmark is set for its lowest close in a week, according to CMA.
The won strengthened to 1,086.98 per dollar, according to data compiled by Bloomberg, after weakening by 0.5 percent on Nov. 16. The Australian dollar climbed 0.3 percent to $1.0375. The Dollar Index fell 0.2 percent, the most in three weeks.
European finance chiefs are due to meet in Brussels tomorrow for the second time in a week after they agreed seven days ago to keep Greece’s bailout aid flowing. In addition to a disagreement between the European Union and International Monetary Fund over softening Greece’s debt target, the ministers will attempt to re-engineer the current bailout without asking taxpayers to put up more money.
Bond Purchases
Treasuries declined. Ten-year yields increased two basis points to 1.6 percent.
Brazil, Belgium, Luxembourg, Russia, Switzerland, Taiwan and Hong Kong boosted their holdings of U.S. government securities by a collective $264.8 billion since the last debt ceiling debate ended in August 2011, Treasury data released Nov. 16 show. The purchases more than made up for the $123 billion decline in Treasuries owned by China, America’s biggest overseas creditor, to $1.156 trillion.
Copper for delivery in three months advanced to $7,670 a ton in London Metal Exchange trading, while nickel rose 1 percent. Rubber futures in Tokyo climbed 1.4 percent.
Purchases of existing dwellings in the U.S. held at a 4.75 million annual rate last month, according to the median forecast in a Bloomberg survey before today’s report from the National Association of Realtors. Housing starts eased in October to an 840,000 pace from a four-year high of 872,000 units in September, government data may show Nov. 20.
Crude for January delivery rallied to $87.84 a barrel after Israel said it may expand an assault on the Gaza Strip. Israeli Prime Minister Benjamin Netanyahu said yesterday that the army is prepared to “significantly widen the operation,” raising concern Middle East unrest will disrupt oil supplies.
To contact the reporter on this story: Richard Frost in Hong Kong at rfrost4@bloomberg.net.
To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net.
