Asian Stocks Rally on China, Fed as Gold to Crude Advance Asian equities rose, pushing the regional index up from a three-week low, and U.S. stock futures climbed as Chinese manufacturing unexpectedly strengthened and investors speculated concerns over disinflation will delay reductions in U.S. stimulus. Crude oil and gold rallied. The MSCI Asia Pacific Index added 0.8 percent by 10:17 a.m. in Tokyo, following yesterday’s 1.2 percent drop to the lowest level since July 9. Standard & Poor’s 500 Index futures rose 0.5 percent, after the U.S. benchmark closed down less than 0.1 percent. The Australian dollar headed for a three-year low versus the greenback and New Zealand’s currency also weakened. West Texas Intermediate crude added 0.5 percent, while gold snapped a four-day decline. A Chinese government purchasing managers’ index for manufacturing in July came in at 50.3, up from 50.1 in June and compared with a median economist estimate of 49.8, a report today showed. Readings above 50 signal expansion. While data in the U.S. showed the economy expanded more than economists estimated in the second quarter, the Fed said yesterday that persistently low inflation poses risks to the nation’s outlook. Policy makers in Europe and England review interest rates today. “The Fed moved back slightly to the dovish side,” Evan Lucas, a Melbourne-based market strategist at IG Markets Ltd., a provider of trading services for equities, currencies and commodities, said by phone. “The U.S. economy does look like it’s growing a bit stronger and the Fed hasn’t said when it will announce tapering. China data later is expected to show a contraction, it’s just a question of how much.” Sony Earnings Japan’s Topix Index also rebounded, gaining 1.1 percent after retreating 1.5 percent yesterday. Sharp Corp., Sony Corp. and Kyocera Corp. are among Japanese companies scheduled to report earnings today, data compiled by Bloomberg show. South Korea’s Kospi Index (KOSPI) rose 0.3 percent, while Australia’s S&P/ASX 200 Index added 0.7 percent, gaining a ninth day in the longest stretch of advances since January. Fed Chairman Ben S. Bernanke and his colleagues have been debating when employment gains will be sufficient to warrant tapering bond purchases that have swelled the Fed’s balance sheet to a record $3.57 trillion and fueled global asset gains. The Fed said yesterday that its bond buying will remain divided between $45 billion a month of Treasury securities and $40 billion a month of mortgage-backed securities. The central bank will also continue reinvesting securities as they mature. “The committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term,” the Federal Open Market Committee said at the conclusion of its two-day meeting in Washington. U.S. consumer prices rose 1.8 percent from a year earlier in June, down from an average of 2.2 percent over the previous three years, data compiled by Bloomberg show. Aussie, Kiwi The currency known as the Aussie weakened 0.2 percent to 89.65 U.S. cents, poised for the lowest close since Aug. 31, 2010. Reserve Bank of Australia Governor Glenn Stevens said this week that inflation data may indicate there is room for interest-rate cuts. Australian government bonds due in a decade rose, pushing the yield down six basis points, or 0.06 percentage point, to 3.66 percent today. New Zealand’s dollar lost 0.2 percent to 79.67 cents, after rallying 3.2 percent last month for the steepest advance among 16 major currencies tracked by Bloomberg. Manufacturing Indexes The Bloomberg Dollar Index, which tracks the currency against 10 major peers, was little changed after falling 0.1 percent yesterday, the first decline this week. The yen was steady at 97.91 per dollar, after strengthening 1.3 percent versus the greenback in July. Japan’s currency was also little changed today at 130.22 per euro, after slipping 0.2 percent yesterday. The euro was little changed at $1.3300. Futures on the Hang Seng Index in Hong Kong rose 0.1 percent in their most recent trading session, while contracts on the Hang Seng China Enterprises Index of the most-traded Chinese stocks in the city fell 0.2 percent. The Shanghai Composite Index (SHCOMP) of domestic Chinese shares added 0.7 percent last month. A manufacturing index for the euro zone also due today will come in at 50.1, unchanged from the previous month, according to a separate Bloomberg survey. The HSBC Holdings Plc/ Markit Economics PMI for India is also scheduled for today. Speculation about the fate of the Fed’s $85 billion in monthly bond purchases has whipsawed markets since May, when Bernanke first indicated policy makers could begin reducing stimulus this year should the job market continue to improve. Market Gyrations The S&P 500 tumbled 5.8 percent from a record high from May 21 through June 24. The U.S. benchmark then rebounded as much as 7.8 percent, reaching its latest closing record of 1,695.53 July 22 as policy makers stressed that any tapering of stimulus would depend on improving economic data. Ten-year Treasury yields jumped from an intraday low of 1.61 percent May 1 to as high as 2.75 percent July 8. Three rounds of bond purchases by the U.S. central bank, coupled with improving earnings and economic growth, has helped propel the S&P 500 (SPX) up about 150 percent from its bear-market low in 2009. The central bank will begin to reduce its bond-purchase program in September, according to the latest Bloomberg survey of economists Yields on 10-year Treasuries added two basis points to 2.59 percent. Payrolls Outlook Gross domestic product in the U.S. rose at a 1.7 percent annualized rate in the second quarter, from 1.1 percent in the first three months of the year, Commerce Department figures showed yesterday. Economists projected a 1 percent gain. The 200,000 increase in private jobs in July followed a revised 198,000 gain in June that was higher than initially estimated, according to data from the ADP Research Institute in Roseland, New Jersey yesterday. The median forecast of 40 economists surveyed by Bloomberg called for a July advance of 180,000. Government payroll data, to be released tomorrow, will show employers added 185,000 workers in July, after increasing 195,000 in June, a survey of economists shows. The jobless rate probably fell to 7.5 percent from 7.6 percent, according to economists’ projections. Most industrial metals rose on the London Metal Exchange, with copper for three-month delivery gaining a second day to add 0.1 percent. Zinc climbed 0.4 percent and nickel increased 0.8 percent. Gold jumped 0.2 percent to $1,328.29 an ounce, while silver sank 0.4 percent. Rubber futures due in January gained 1.4 percent. WTI increased to $105.51 a barrel after rallying 8.8 percent in July. WTI jumped 1.9 percent in New York yesterday as the U.S. government said supplies at Cushing, Oklahoma, the delivery point for New York futures, slid 4.3 percent last week to a 15-month low.
Posted on: Thu, 01 Aug 2013 10:42:24 +0000
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