Bloomberg News

Japanese, Australian Stock Futures Gain on U.S. Housing

July 18, 2012

Japanese and Australian stock futures rose after U.S. housing starts jumped to the highest level in almost four years, boosting the earnings outlook for Asian exporters. Gains in Japanese shares may be limited as the yen advanced against most of its counterparts.

American depositary receipts of machinery maker Komatsu Ltd. (6301), which depends on the Americas for 23 percent of its sales, gained 0.7 percent from the closing share price in Tokyo. ADRs of BHP Billiton Ltd. (BHP), Australia’s biggest oil producer, increased 1.3 percent as crude prices exceeded $90 a barrel for the first time since May. Those of Mizuho Financial Group Inc. fell 0.6 percent after the lender agreed to pay $128 million to settle U.S. regulatory claims it inflated credit ratings of a financial product tied to subprime mortgages.

Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring in September closed at 8,775 in Chicago yesterday, up from 8,740 in Osaka, Japan. They were bid in the pre-market at 8,790 in Osaka at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index rose 0.9 percent today. New Zealand’s NZX 50 Index gained 0.5 percent in Wellington.

“The U.S. economy has gone through a bit of soft patch, but the housing sector does seem to be heading for recovery, which is positive from a longer-term perspective for America,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “The market still likes what it sees.”

Housing Starts

Futures on the Standard & Poor’s 500 Index (SPXL1) rose 0.2 percent today. The index advanced 0.7 percent in New York yesterday, when the Commerce Department reported that housing starts jumped 6.9 percent last month to a 760,000 annual pace, the highest since October 2008.

The Federal Reserve said in a survey based on reports from its 12 district banks that the economy expanded at a “modest to moderate” pace in June and early July. Fed Chairman Ben S. Bernanke said yesterday told Congress that the Fed can limit inflation while providing record stimulus.

The MSCI Asia Pacific Index (MXAP) gained 1.7 percent this year through yesterday, compared with a 9.2 percent advance by the S&P 500 and a 5.9 percent increase by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 11.8 times estimated earnings on average, compared with 13.2 times for the S&P 500 and 10.9 times for the Stoxx 600.

Yen Gains

The yen gained against 14 of its 16 major counterparts yesterday, when Japan’s Topix Index fell for a ninth day, the longest losing streak since July 2009. A stronger yen cuts the value of earnings at Japanese exporters when repatriated.

The Bloomberg China-US Equity Index of the most-traded Chinese shares in New York dropped 0.2 percent to 84.73.

Oil advanced for a sixth day as U.S. gasoline inventories fell. Oil for August delivery increased 65 cents, or 0.7 percent, to settle at $89.87 a barrel on the New York Mercantile Exchange. The price ranged from $88.59 to $90.04, the highest intraday level since May 30. By Joshua Gallu

Mizuho Financial Group, Japan’s third-biggest bank, agreed to pay $128 million to settle U.S. regulatory claims that it used “dummy assets” to inflate the credit ratings of a financial product tied to subprime mortgages as the housing market deteriorated in 2007.

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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