Bloomberg News

Japan Stock Futures, Australian Equities Rise Before U.S. Data

October 28, 2012

Japanese stock futures and Australian equities rose as investors awaited economic data in the U.S. this week and as the approaching Hurricane Sandy shut floor trading on the New York Stock Exchange.

American Depositary Receipts of Komatsu Ltd. (6301), a Japanese construction-machinery company that gets more than 80 percent of sales abroad, advanced 0.6 percent. ADRs of Sumitomo Mitsui Financial Group Inc., Japan’s second-biggest bank by market value, climbed 1.1 percent after saying first-half profit probably rose 5.2 percent, exceeding the lender’s previous forecast. BHP Billiton Ltd., the world’s largest mining company, rose 0.3 percent after an Oct. 26 report showed the U.S. economy grew more than forecast in the third quarter, boosting metal prices.

Futures on Japan’s Nikkei 225 Stock Average expiring in December closed at 8,965 in Chicago Oct. 26, up from 8,930 in Osaka, Japan. They were bid in the pre-market at 8,960 in Osaka at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index (AS51) gained 0.4 percent today. New Zealand’s NZX 50 Index retreated 0.3 percent in Wellington. In the U.S., the New York Stock Exchange and New York Mercantile Exchange canceled floor trading as Hurricane Sandy barreled toward New York City with the threat of a 10-foot storm surge and 70 mile-per-hour winds. The market operators said trading will occur normally on their electronic platforms.

“This week’s U.S. payrolls data and manufacturing survey will give more guidance on the macro front,” said George Boubouras, Melbourne-based head of investment strategy at UBS AG’s Australian wealth-management unit. The Swiss bank has about $1.5 trillion in assets under management.

Housing Recovery

“The U.S. macro data, particularly the housing recovery, looks promising for 2013, particularly given the recent stimulus,” he said. “However, given the U.S. election is just over a week away, expectations are for range trading until there is some clarity on who will steer policy for the next four years.”

Futures on the Standard & Poor’s 500 Index fell 0.3 percent today as investors braced for the impact of Hurricane Sandy. The last time the NYSE cut trading hours for weather was Jan. 8, 1996, when a blizzard dropped more than 20 inches of snow on New York City.

Citigroup Inc. (C:US) and Goldman Sachs Group Inc. are among Wall Street firms planning to shift operations to other cities and have staff work from home as Hurricane Sandy’s arrival in New York forces evacuations.

Jobless Rate

The U.S. jobless rate probably rose in October to 7.9 percent as employers kept a tight rein on payrolls with the nation closing in on the so-called fiscal cliff, economists said before a report this week. A net 125,000 workers were added to headcounts following an increase of 114,000 in September, according to the median forecast of 72 economists surveyed by Bloomberg before the Nov. 2 Labor Department figures.

A Nov. 1 report may affirm U.S. manufacturing is slowing. Economists forecast the Institute for Supply Management’s factory index for October fell to 51.2 from 51.5 the prior month. A reading of 50 is the dividing line between expansion and contraction.

Bank of Japan Governor Masaaki Shirakawa’s board is facing political pressure to ease policy as government data last week showed consumer prices fell for a fifth straight month. The break-even rate suggests that inflation will remain below the BOJ’s 1 percent goal even in 2017. All but one of 27 economists surveyed by Bloomberg News expect the central bank will increase asset purchases at its policy meeting tomorrow.

Relative Value

The MSCI Asia Pacific (MXAP) Index advanced 11 percent from this year’s low on June 4 through Oct. 26 as stimulus measures in the U.S., Japan and China boosted sentiment amid a global economic slowdown and Europe’s debt crisis. The gauge traded at 12.8 times estimated earnings on average, compared with 13.5 for the Standard & Poor’s 500 Index and 12.1 for the Stoxx Europe 600 Index.

Hong Kong Chief Executive Leung Chun-ying imposed the city’s first property tax targeted at overseas buyers as U.S. monetary easing and record-low interest rates boost the risk of a housing bubble.

Non-local and corporate buyers will have to pay a 15 percent tax upon purchase, Financial Secretary John Tsang told reporters at a press conference on Oct. 26. The government also raised a resale tax on property by about 5 percentage points and extended the period during which it will apply to three years from two.

The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese companies in the U.S. slid 1.8 percent to 94.30 on Oct. 26, posting its first weekly drop in five.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

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


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