Bloomberg News

Japanese Stock Futures, Australian Shares Rise on U.S. Growth

October 27, 2011

Oct. 28 (Bloomberg) -- Japanese stock futures and Australian stocks rose as the fastest U.S. economic growth in a year boosted the earnings outlook for Asian exporters after Europe announced measures to contain the region’s debt crisis.

American depositary receipts of Honda Motor Co., Japan’s second-largest carmaker by market value that gets 83 percent of its revenue abroad, rose 2.1 percent from the closing share price in Tokyo. Those of Hitachi Ltd., a maker of electronic equipment and machinery, gained 1.5 percent. BHP Billiton Ltd., Australia’s No. 1 mining company, advanced 1.9 percent after metal and crude prices advanced.

Futures on Japan’s Nikkei 225 Stock Average expiring in December closed at 9,045 in Chicago yesterday, up from 8,920 in Osaka, Japan. They were bid in the pre-market at 9,030 in Osaka at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index rose 1.5 percent today. New Zealand’s NZX 50 Index advanced 1.2 percent in Wellington.

Fears of a U.S. recession are fading, according to Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “It’s not an economic scenario at this stage that the U.S. will go into a recession,” he said. “The market has been pricing in less macro-economic risks as a result of what happened over the last 24 hours.”

U.S. Growth

Futures on the Standard & Poor’s 500 Index fell 0.1 percent. In New York, the index rose 3.4 percent yesterday after the U.S. economy grew in the third quarter at the fastest pace in a year as gains in consumer spending and business investment helped support a recovery on the brink of faltering. Household purchases, the biggest part of the economy, rose at a 2.4 percent pace, beating estimates.

Separately, the number of contracts to buy previously owned U.S. homes unexpectedly fell in September as lower prices and borrowing costs failed to support demand. A separate report showed fewer Americans filed applications for unemployment assistance last week, while those on benefit rolls dropped to a three-year low, signaling limited improvement in the labor market.

Global stocks rallied yesterday as European leaders talked bondholders into accepting 50 percent writedowns on Greek debt and boosted their rescue fund’s capacity to 1 trillion euros ($1.4 trillion) in a crisis-fighting package intended to shield the euro area.

‘Devil in Detail’

“The devil will be in the detail in terms of how proposals will be executed and how effective policy makers will be,” Pengana Capital’s Schroeders said.

The MSCI Asia Pacific Index declined 11 percent this year through yesterday, compared with a 2.1 percent gain by the S&P 500 and a 9.6 percent drop by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.6 times estimated earnings on average, compared with 12.9 times for the S&P 500 and 10.8 times for the Stoxx 600.

The London Metal Exchange Index of prices for six industrial metals including copper and aluminum rose 4.8 percent yesterday, gaining for a second day. The Thomson Reuters/Jefferies CRB Index of raw materials gained 2.6 percent yesterday, heading for a weekly gain.

--Editors: John McCluskey, Jason Clenfield.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.


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