Dec 27, 2012
Asian stocks rose for a third day and the yen dropped to a 27-month low on speculation Japan will step up stimulus to support growth in the world’s third-largest economy. Metals climbed in London after a two-day holiday.
The MSCI Asia Pacific Index rose 0.4 percent as of 1:30 p.m. in Tokyo. The Nikkei 225 Stock Average climbed 1 percent and was headed for its highest close since March 10, 2011, the day before an earthquake and tsunami devastated north-eastern Japan. Standard & Poor’s 500 Index futures fell 0.1 percent before U.S. budget talks resume today. The yen fell 0.2 percent to 85.82 a dollar. Copper in London added 1.3 percent as data added to signs of strengthening demand in China.
Economists predict Japan will report tomorrow a decline in its core consumer prices, supporting newly-installed Prime Minister Shinzo Abe’s case for “bold” monetary policy to spur the economy. Chinese industrial companies’ profits rose 23 percent in November, surpassing gains in the previous month, the government reported today. U.S. lawmakers convene today for budget negotiations aimed at avoiding more than $600 billion in tax gains and spending cuts scheduled to take effect Jan. 1.
“The message from Japan is clear,” said Stan Shamu, a markets strategist at IG Markets Ltd. in Melbourne. “The incoming government will do everything in its power to weaken the yen and stimulate the economy.”
More than three stocks climbed for every two that fell on the MSCI Asia Pacific Index, led by gains in Japanese exporters and financial companies. The gauge has advanced 13 percent this year.
Mazda, Banks
Mazda Motor Corp., an automaker that gets 28 percent of its sales in North America, surged 5.8 percent in Tokyo as a weaker yen boosted the earnings outlook for export-oriented businesses. Mitsubishi UFJ (8306) Financial Group Inc., Japan’s biggest lender, added 1.1 percent. Nomura Holdings Inc. advanced 2.3 percent, rising for an 11th day in the longest winning streak since 2003.
Hong Kong’s Hang Seng Index rose 0.4 percent, led by shares of Chinese companies, after a two-day holiday. The Shanghai Composite Index fell 0.1 percent after climbing 3.1 percent in the last three days. South Korea’s Kospi Index dropped 0.3 percent as the government lowered its economic growth forecasts for this year and next.
The Philippine peso fell to a five-week low of 41.25 per dollar after the central bank clamped down on the use of currency forwards. The peso has strengthened 6.4 percent this year, a performance second only to South Korea’s won among Asia’s 11 most-used currencies.
‘Bold’ Policy
The yen touched 85.87 per dollar, the weakest level since September 2010, and sank to a 16-month low of 113.65 versus the euro. The currency has tumbled 14 percent this year, the biggest drop among the 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes.
Japan’s consumer prices excluding fresh food fell 0.1 percent last month from a year earlier, according to the median estimate in a Bloomberg survey. That would be the sixth decline in seven months and compares with the Bank of Japan’s target of 1 percent inflation.
The central bank expanded its asset-purchase fund last week to 76 trillion yen ($885 billion) from 66 trillion yen, the third increase in four months, and Abe said yesterday that “bold” monetary policy is one of the three pillars of his economic measures.
“The birth of the Abe administration is spurring expectations in markets that deflation will end,” said Kazuo Shirai, a trader at Union Bank NA in Los Angeles. “Markets are anticipating that the government will clarify its willingness to bring the yen down.”
Sure Bet
Further depreciation of the yen versus the dollar is one of the surest bets going into the new year, according to John Taylor, founder and chairman of New York-based currency hedge fund FX Concepts LLC. The yen will weaken to 90 per dollar before a resumption in risk aversion prompts investors to return to traditional refuge currencies, he said.
Treasuries declined, pushing the 10-year yield up one basis point to 1.77 percent, before a report today that may add to evidence of a recovery in the U.S. housing market. Economists predict purchases of new homes quickened to a 380,000 annual pace in November, based on the median estimate in a Bloomberg survey. That would be the most since April 2010.
Treasury Secretary Timothy F. Geithner said yesterday the U.S. government will hit its statutory debt ceiling on Dec. 31 and he will take “extraordinary measures” to postpone a U.S. default for about two months, allowing more time for lawmakers to agree a deficit-reduction deal.
Copper in London rose to $7,919 a metric ton, from $7,810, while zinc gained 1.1 percent. China is the world’s biggest user of the metal and earnings at the nation’s industrial companies increased for a third month in November, according to a government report today.
Rubber in Tokyo rallied above the 300-yen per kilogram level for the first time since May because of the weakening Japanese currency.
Source：businessweek.com