BLBG: Asian Stocks, Copper Climbs as Economy Improves; Euro Weakens
By Patrick Chu and Masaki Kondo
Jan. 6 (Bloomberg) -- Asian stocks advanced, the risk of defaults in the region fell and copper rose to the highest level in more than 16 months on signs the global economy is improving. The euro weakened on concerns about support for Greece.
The MSCI Asia Pacific Index rose 0.5 percent to 124.23 as of 5 p.m. Tokyo time. Copper increased 1.3 percent and the cost of protecting bonds in Asia and Australia from default fell to the lowest level since May 2008, CMA DataVision prices show. Europe’s Dow Jones Stoxx 600 climbed 0.3 percent to 258.39 and U.S. futures fell. The euro dropped after an Italian newspaper cited European Central Bank policy maker Juergen Stark as saying markets can’t assume the region will bail out Greece.
U.S. auto sales rose 15 percent in December from declines in November and October. Economists surveyed by Bloomberg News project the U.S. government will say on Jan. 8 that payrolls were unchanged in December, the first month employment didn’t contract since the recession began two years ago. German unemployment unexpectedly fell in December, the government said yesterday, as exports rose.
“Demand is on a steady recovery worldwide,” said Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which oversees $94 billion. “The market and economy will be better in 2010 than last year.”
About two stocks advanced for every one that fell in the MSCI Asia Pacific Index. The gauge has climbed 37 percent in the past 12 months. The Topix Index climbed 1.3 percent. Futures on the Standard & Poor’s 500 Index lost 0.2 percent. The index added 0.3 percent yesterday after factory orders rose 1.1 percent in November, more than twice what economists estimated.
Sales Gains
Toyota Motor Corp. rose 2.5 percent to 3,900 yen after its December U.S. sales jumped 32 percent. Nintendo Co. climbed 6.9 percent to 24,500 yen after U.S. sales of its Wii game console rose to more than 3 million last month, the Kyoto-based company estimated on its Web site.
Hynix Semiconductor Inc. gained 5.1 percent to 24,550 won. The United Arab Emirates offered in November to buy a stake in the company, the Electronic Times reported today. Sumitomo Mitsui Financial Group Inc. jumped 5.5 percent to 2,800 yen, leading an advance among Japanese banks on expectations further capital raising needs will be limited.
Japan Airlines Corp. sank 6.7 percent to 84 yen. The Development Bank of Japan, the company’s biggest creditor, and the Finance Ministry favor bankruptcy proceedings to restructure the airline, Nikkei English News reported.
Credit-Default Swaps
The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan dropped 2 basis points to 88 basis points, the lowest since May 2008, ICAP Plc and CMA prices show.
The Markit iTraxx Australia index fell 1 basis point to 79.5 basis points, also the lowest since May 2008, Citigroup Inc. and CMA prices show. The Markit iTraxx Japan index declined 3.5 basis points to 127.5 basis points, a two-month low, according to Morgan Stanley and CMA prices in Tokyo.
The difference in yield to own bonds in developing countries instead of Treasuries narrowed 4 basis points to 2.71 percentage points, a 19-month low, according to the JPMorgan Emerging Markets Bond Index Plus. It narrowed 4.16 percentage points last year as credit markets recovered from the collapse of Lehman Brothers Inc. in Sept. 2008.
The Philippines, Indonesia and Vietnam are preparing U.S. dollar bond sales. Turkey sold $2 billion of 30-year bonds yesterday, its longest-dated international debt since February 2008, taking advantage of borrowing costs near the lowest on record.
Corporate Bond Sales
Companies led by General Electric Capital Corp. and a unit of Lloyds Banking Group Plc led U.S. corporate bond sold $23.2 billion of bonds in the U.S. yesterday, the second-biggest day ever.
The euro dropped as low as $1.4371 in London, from $1.4365 in New York yesterday after Il Sole 24 Ore quoted Stark as saying investors can’t assume the European Union will bail out Greece if such a move were necessary.
“The markets are deluding themselves when they think at a certain point the other member states will put their hands on their wallets to save Greece,” the paper cited Stark as saying in an interview published today.
The yen weakened against 14 of its 16 major counterparts after stocks gained, and the cost of protecting Asia-Pacific corporate and sovereign bonds from non-payment dropped. Japanese Prime Minster Yukio Hatoyama urged ailing Finance Minister Hirohisa Fujii to stay in his job, declining to confirm reports that Fujii will step down because of deteriorating health.
Australia’s dollar strengthened after a government report showed home-building approvals rose at a faster pace than economists estimated.
‘Funding Currency’
The yen fell to 83.92 per Australian dollar from 83.63 in New York yesterday. It slipped to 12.335 against South Korea’s won from 12.435. The Australian dollar rose to 91.09 U.S. cents from 91.19 cents.
“We continue to see the case building for the yen returning to its role as a funding currency to a degree not seen since 2007,” said Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney. “With risk appetite still buoyant, as witnessed by further declines in CDS premiums, and strong emerging markets, we see more downside risk for the yen.”
Oil traded near a 14-month high as snowstorms blanketed most of China, Europe and the U.S. Eastern Seaboard. The National Weather Service forecast temperatures in the U.S. Northeast will remain below normal through Jan. 14 and the American Petroleum Institute said crude supplies dropped 2.27 million barrels last week.
‘Optimism is Spreading’
Oil for February delivery traded at $81.61 a barrel, down 16 cents, in New York. The contract rose for a ninth day yesterday, the longest stretch since July, gaining 26 cents to $81.77, the highest close since Oct. 9, 2008.
Copper for three-month delivery on the London Metal Exchange advanced to $7,78.50 per metric ton, the highest level since August 2008, on investors’ optimism that the global economic recovery will be sustained. New York and Shanghai futures for the metal used in cables also advanced.
“The general feeling of optimism is spreading” said Wang Haifeng, an analyst at Shanghai Liangmao Futures Co. “The Shanghai, London and New York copper markets are feeding off each other, and taking turns to drive one another higher.”
Gold for immediate delivery rose 0.2 percent to $1,120.08 an ounce.
To contact the reporters on this story: Patrick Chu in Hong Kong at pachu@bloomberg.net; Masaki Kondo in Tokyo at Mkondo3@bloomberg.net.
