Bloomberg News

Japanese Stock Futures Gain After EU Moves to Stem Crisis

July 01, 2012

Japanese and Australian stock futures rose as the yen weakened and Spanish and Italian bonds surged after European leaders expanded steps to stem the region’s debt crisis.

American depositary receipts of Canon Inc. (7751), a Japanese camera maker that depends on Europe for almost a third of its sales, gained 0.8 percent from the closing share price in Tokyo. ADRs of Honda Motor Co. (7267), a carmaker that gets almost 40 percent of its revenue from North America, rose 0.7 percent after an index of U.S. business activity unexpectedly accelerated. Those of BHP Billiton Ltd. (BHP), Australia’s biggest oil producer, advanced 1.4 percent after crude prices jumped the most in more than three years.

Futures on Japan’s Nikkei 225 Stock Average expiring in September closed at 9,105 in Chicago on June 29, up from 9,010 in Osaka, Japan. They were bid in the pre-market at 9,100 in Osaka at 8:05 a.m. Futures on Australia’s S&P/ASX 200 Index rose 0.9 percent today. New Zealand’s NZX 50 Index advanced 0.6 percent in Wellington.

“The euro strengthened and Spanish yields plunged. Investors are now in a situation to take risks,” said Hideyuki Ishiguro, assistant manager of investment strategy at Okasan Securities Co. in Tokyo. “The European Central Bank may lower interest rates this week.”

Futures on the Standard & Poor’s 500 Index added 0.2 percent today. The gauge jumped 2.5 percent, the most in 2012, in New York on June 29 after European leaders agreed to relax conditions on emergency loans for Spanish banks and possible help for Italy as an outflanked German Chancellor Angela Merkel gave in on expanded steps to stem the region’s debt crisis.

Bonds Surge

Spain’s Economy Minister Luis de Guindos said on July 1 a swift adoption of decisions to foster a banking, fiscal and political union made at last week’s European Summit would help reduce the country’s borrowing costs.

Spain’s 10-year yield fell the most since August, and Italy’s 10-year yield fell to 5.8 percent on June 29.

Economists expect the European Central Bank will lower its benchmark interest rate by at least 25 basis points to a record low of 0.75 percent on July 5, according to the median of 57 estimates in a Bloomberg survey.

The yen depreciated to as low as 101.30 against the euro today in Tokyo, compared with 99.96 at the close of stock trading on June 29. Against the dollar, Japan’s currency weakened to 79.93 from 79.37. A weaker yen boosts the value of overseas income at Japanese companies when converted into their home currency.

Oil Jumps

In the U.S., an index of business activity unexpectedly expanded in June at a faster pace. Other reports showed consumer spending stalled in May, while household sentiment dropped in June to the lowest level of the year.

Crude oil for August delivery soared 9.4 percent to $84.96 a barrel in New York on June 29, the biggest gain since March 2009. The London Metal Exchange Index of prices for six industrial metals including copper and aluminum gained 3.9 percent, the biggest increase since Nov. 30.

The Bloomberg China-US 55 Index (CH55BN) of the most-traded Chinese equities in the U.S gained 2.9 percent to 91.21 in New York on June 29, the biggest advance since May 29.

In China, the Purchasing Managers’ Index fell to 50.2 in June from 50.4 in May, the Beijing-based National Bureau of Statistics and China Federation of Logistics and Purchasing said. That beat the 49.9 median estimate in a Bloomberg News survey of 24 economists. A reading above 50 indicates expansion.

Monetary Policy

“The Chinese PMI isn’t bad as much as expected. The decline may help expectations for easing monetary policies to be continued,” said Okasan Securities’ Ishiguro.

The MSCI Asia Pacific Index (MXAP) climbed 3 percent this year through June 29, compared with an 8.3 percent advance by the S&P 500 and a 2.7 percent increase by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12 times estimated earnings on average, compared with 13.1 times for the S&P 500 and 10.6 times for the Stoxx 600.

In Japan, the government is scheduled to release its quarterly Tankan index of sentiment among the nation’s largest manufacturers at 8:50 a.m. in Tokyo.

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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