Bloomberg News

Japan Stock Futures Rise as China Comments Spark Global Rebound

May 21, 2012

Japanese and Australian stock futures rose as global share markets rebounded from the worst week since September after China pledged to bolster economic growth while German and French officials said they will work to keep Greece in the euro.

American depositary receipts of Komatsu Ltd., a Japanese construction machinery maker that gets 14 percent of its sales from China, rose 1.5 percent from the closing share price in Tokyo. Those of Sony Corp. (6758), an electronics maker that depends on Europe for a fifth of its revenue, climbed 1.1 percent. ADRs of BHP Billiton Ltd. (BHP), Australia’s top oil producer and the world’s No. 1 mining company by market value, gained 1.3 percent after oil and metal prices increased.

Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring in June closed at 8,695 in Chicago yesterday, compared with 8,620 in Osaka, Japan. They were bid in the pre-market at 8,690 in Osaka at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index climbed 0.8 percent today. New Zealand’s NZX 50 Index increased 0.7 percent in Wellington.

“Stimulus measures by China, a country with the world’s No. 2 gross domestic product, is positive for the world economy,” said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co. “China may stimulate the economy or markets as the nation’s exports are getting sluggish due to the European economic slowdown.”

Futures on the Standard & Poor’s 500 Index (SPXL1) were little changed today. The index gained 1.6 percent in New York yesterday, the biggest rally since March 13, after Chinese Premier Wen Jiabao pledged to focus more on bolstering growth. Germany and France agree that they will do “everything necessary” to ensure Greece remains in Europe’s single currency, Finance Minister Wolfgang Schaeuble said after a meeting with French Finance Minister Pierre Moscovici.

Global Rebound

The Stoxx Europe 600 Index gained 0.5 percent, recouping some of last week’s 5.2 percent drop. The MSCI All-Country World Index rebounded 1.2 percent following last week’s 5.3 percent plunge, its worst since the week ending Sept. 23.

The yen declined against most of its major counterparts on speculation the Bank of Japan will add to stimulus measures this week to support growth and weaken the nation’s foreign-exchange rates. BOJ officials begin a two-day meeting today. The central bank expanded its asset-purchase program in February and April. Last week, two bond-buying operations failed to attract the BOJ’s target for sell offers.

Yen Falls

The yen depreciated to as low as 79.45 against the dollar, compared with 79.26 at the close of stock trading yesterday. Against the euro, Japan’s currency weakened to 101.71 today from 101.34. A weaker yen boosts the value of overseas income at Japanese companies when repatriated.

Crude oil for June delivery gained for the first time in seven days in New York yesterday, rising 1.2 percent to settle at $92.57 a barrel, its biggest advance since May 1. The London Metal Exchange Index of prices for six industrial metals including copper and aluminum added 0.4 percent, rising for a third day.

The Bloomberg China-US 55 Index (CH55BN) of the most-traded Chinese equities in the U.S jumped 2.8 percent to 93.27 in New York yesterday. Chinese stocks trading in New York climbed the most since Jan. 10, led by Tudou Holdings Ltd., China’s second- largest video-sharing website.

The MSCI Asia Pacific Index (MXAP) has declined 10 percent this month through yesterday on concern political chaos in Greece increases the risk the nation will exit the euro zone and other debt-stricken nations such as Portugal and Italy may follow.

The MSCI Asia Pacific Index dropped 1 percent this year through yesterday, compared with a 4.6 percent advance by the S&P 500 and a 1.8 percent decline by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 0.4 times book value, compared with 2.1 times for the S&P 500 and 1.3 times for the Stoxx 600, according to data compiled by Bloomberg. A number below 1 means companies can be bought for less than value of their assets.

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net.

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


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