Bloomberg News

Japanese Stock Futures, Australian Shares Rise on U.S. Budget

November 29, 2012

Japanese stock futures and Australian equities rose amid investor optimism that U.S. lawmakers will reach a resolution in federal budget negotiations.

American Depositary Receipts Komatsu Ltd. (6301), a Japanese maker of construction and mining equipment that gets about a quarter of its sales from the Americas, advanced 0.8 percent. ADRs of Japanese auto exporters Honda Motor Co. and Toyota Motor Corp. climbed more than 1 percent. BHP Billiton Ltd. (BHP), the world’s largest mining company, climbed 1 percent in Sydney, leading gains among companies with earnings closely tied to economic growth.

Futures on Japan’s Nikkei 225 Stock Average expiring next month closed at 9,460 in Chicago yesterday, up from 9,410 in Osaka, Japan. They were bid in the pre-market at 9,440 in Osaka at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index gained 0.5 percent and New Zealand’s NZX 50 Index rose 0.3 percent in Wellington.

“The market can go higher even if the U.S. lawmakers drag out budget discussions all the way to the last minute,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages almost $100 billion. “They will not let the U.S. economy shrink. There’s a lot of room for negotiation and compromise.”

U.S. Treasury Secretary Timothy Geithner offered Republican House Speaker John Boehner a proposal to avert an end-of-the- year fiscal cliff that would trade $1.6 trillion in tax increases for $400 billion in unspecified entitlement program cuts, a Republican aide said.

Debt Limit

The proposal calls for a permanent increase in the U.S. debt limit that would avoid the need for congressional action, said the aide, who wasn’t authorized to speak publicly. The Boehner said he remains “hopeful” about talks to avert more than $600 billion in spending cuts and tax increases scheduled to begin in January.

Futures on the Standard & Poor’s 500 Index fell 0.4 percent today. The S&P 500 gained 0.4 percent yesterday as Senate Majority Leader Harry Reid said Democrats were all on the same page on budget talks and Senator Chuck Schumer said there has been progress.

The MSCI Asia Pacific (MXAP) Index rose 14 percent through yesterday from this year’s low on June 4 as central banks added stimulus to spur growth and data showed a slowdown in China may be ending. The gauge traded at 14 times estimated earnings, compared with 13.6 times for the S&P 500 and 12.5 times for the Stoxx Europe 600 Index.

The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S. gained 0.4 percent yesterday in New York.

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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