Bloomberg News

Japanese Stock Futures Gain as Central Banks Ease Dollar Funding

November 30, 2011

Dec. 1 (Bloomberg) -- Japanese stock futures and Australian shares gained after six central banks cut the cost of emergency dollar funding for European banks in response to the continent’s sovereign-debt crisis.

American depositary receipts of Mitsubishi UFJ Financial Group Inc., Japan’s biggest lender by market value, rose 2.7 percent from the closing share price in Tokyo yesterday. Those of Komatsu Ltd., a construction machinery maker that counts China as its fastest-growing market, gained 3.2 percent after China reduced lending curbs for its banks. BHP Billiton Ltd., the world’s biggest mining company, jumped 4.6 percent in Sydney after oil and metals prices rose.

Futures on Japan’s Nikkei 225 Stock Average expiring in December closed at 8,645 in Chicago yesterday, compared with 8,420 in Osaka, Japan. The contracts were bid in the pre-market at 8,630 in Osaka at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index rose 2.7 percent today. New Zealand’s NZX 50 Index increased 0.7 percent in Wellington.

“The action by the central banks is an effective way to address the current critical situation,” said Mitsushige Akino, who oversees about $600 million in Tokyo at Ichiyoshi Investment Management Co. “China cut the reserve ratio for its banks earlier than expected and it will likely boost stocks.”

S&P Surges

The Standard & Poor’s 500 Index jumped 4.3 percent in New York yesterday, its biggest gain since Aug. 11, after the Federal Reserve and five other central banks took action on Europe’s debt crisis by making it cheaper for lenders to borrow in dollars. Futures on the S&P were little changed today.

China lowered reserve requirements for banks, allowing more lending, for the first time since 2008. The central bank’s decision to cut reserve ratios by 50 basis points may add 350 billion yuan ($55 billion) to the financial system, according to UBS AG.

The euro gained against the yen and the dollar as investors sought higher-yielding assets. Europe’s shared currency rose to as high as 104.73 yen last night in Tokyo, its highest level in more than two weeks. A stronger euro boosts the value of some overseas income for Asia’s exporters.

Reports in the U.S. showed the world’s biggest economy is strong enough to skirt recession. Companies boosted payrolls in November by the most this year and U.S. businesses expanded at the fastest pace in seven months. Separately, the Fed said gains in manufacturing and consumer spending helped the economy expand at a “moderate” pace in 11 of its 12 districts.

Crude oil for January delivery rose 0.6 percent to $100.36 a barrel in New York yesterday. The London Metal Exchange Index of prices for six industrial metals soared 5 percent, the steepest gain since Oct. 24.

The MSCI Asia Pacific Index declined 18 percent this year through yesterday, compared with a 0.9 percent drop by the S&P 500 and a 13 percent slump by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.6 times estimated earnings on average, compared with 12.6 times for the S&P 500 and 10.5 times for the Stoxx 600.

--Editor: Jason Clenfield.

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Masaaki Iwamoto in Tokyo at miwamoto4@bloomberg.net

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


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