Bloomberg News

Japan Stock Futures Rise as Yen Drops, BOJ Reiterates Stimulus

April 10, 2013

Japanese stock futures rose as the yen sank to the weakest level in almost four years after the Bank of Japan (8301) reiterated its intention to maintain a stimulus program. Australian equity futures advanced.

American Depositary Receipts of Canon Inc. (7751), a Japanese camera maker that gets 80 percent of sales abroad, gained 2.1 percent. ADRs of Sharp Corp. advanced 5.7 percent as the Nikkei newspaper reported profit at the electronics manufacturer will exceed it forecasts. ADRs of Woodside Petroleum added 1 percent as Australia’s second-biggest oil producer was among gains by companies with earnings closely tied to economic growth.

Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring in June closed at 13,515 in Chicago yesterday, up from 13,290 at the close in Osaka, Japan. They were bid in the pre-market at 13,480 in Osaka at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index advanced 0.8 percent and New Zealand’s NZX 50 Index rose 0.3 percent.

“The odds are clearly stacked in favor of a continued rally in Japan,” said Mikio Kumada, Hong Kong-based global strategist for LGT Capital Management, which oversees more than $25 billion. The BOJ “has essentially scrapped existing rules and programs, replacing them with straightforward and expanded open-market purchases. This bold economic-policy shift has the potential to sustain the rebound.”

The MSCI Asia Pacific Index, the benchmark regional equities gauge, climbed the past five months on speculation Japan would unleash more stimulus and amid signs the U.S. economy is recovering. That left the measure trading yesterday at 13.8 times average estimated earnings compared with 14.3 for the Standard & Poor’s 500 Index (SPX) and 12.6 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

BOJ Stimulus

Bank of Japan Governor Haruhiko Kuroda said the central bank will take all steps necessary to meet a 2 percent inflation target even as he indicated policy adjustments are unlikely every month. The European Central Bank will keep rates low and continue injecting liquidity into the banking system, Governing Council member Christian Noyer said on Europe 1 radio.

“The biggest commitment is that we will take all necessary measures,” Kuroda told reporters in Tokyo yesterday, six days after announcing unprecedented stimulus to double the monetary base over two years.

The yen fell to 99.80 per dollar. The prospect of the currency weakening to 130 per dollar isn’t unreasonable, Jonathan Beinner of Goldman Sachs Group Inc. in New York said on Bloomberg Television.

Fed Minutes

Several Federal Reserve officials said the central bank should taper its bond-buying program later this year and stop it by the end of 2013 if labor-market conditions improve, according to minutes from the central bank’s March meeting released yesterday. Fed Chairman Ben S. Bernanke said on April 8 that economic conditions were far from where he would like them to be.

Futures on the Standard & Poor’s 500 Index were little changed. The measure yesterday climbed 1.2 percent, to a record, as a report showed China’s imports grew, Japan reiterated its stimulus plans and investors speculated earnings will beat estimates.

The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S. climbed 1 percent in New York yesterday.

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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