Asian Stocks Rebound With S&P 500 Futures; Bonds Retreat Asian stocks jumped the most in 15 months while U.S. equity-index (VIX) futures advanced after a four-week losing streak erased about $4.3 trillion from global shares. Japan’s Topix soared, oil advanced and Treasuries fell. The MSCI Asia Pacific Index (MXAP) gained 1.8 percent by 12:19 p.m. in Tokyo. The Topix surged 3.5 percent, the most since June last year, on a report that Japan’s public pension fund will raise its allocation target for domestic shares to about 25 percent from 12 percent. Standard & Poor’s 500 Index futures increased 0.4 percent. Ten-year Treasury yields increased with rates on Australian debt. Crude oil in New York advanced 0.5 percent, and grains retreated. MSCI’s global-stock gauge is rising a second day after markets plunged amid concerns that a potential recession in Europe will undermine growth as the U.S. Federal Reserve pares stimulus. A European Central Bank board member said Oct. 17 that covered bond purchases would begin in the next few days. China’s central bank is planning to inject about 200 billion yuan ($32.7 billion) into lenders as Communist Party leaders gather for a plenum that may further economic and social reforms. “The negativity we’ve seen over the past couple of weeks was way too exaggerated,” said Mikio Kumada, a Hong Kong-based global strategist at LGT Capital Partners. “Liquidity is still there if you think of what’s going on in Europe or in Japan, and the Fed is pretty flexible about responding to any shocks if necessary.” GPIF Report The Asia-Pacific stock gauge is climbing after six straight weeks of decline took it to its lowest close since March 21. All 10 industry groups advanced at least 1 percent as more than 14 stocks gained for each that fell on the gauge. The Topix slipped 5.3 percent last week to leave it down 13 percent from a six-year high reached in September. The Nikkei 225 Stock Average rose 3.3 percent today. Japan’s $1.2 trillion Government Pension Investment Fund, or GPIF, will also boost its holdings of foreign bonds and stocks to a combined level of about 30 percent from 23 percent, while reducing domestic notes to 40 percent from the current 60 percent, the Nikkei reported at the weekend, without saying where it got the information. A government-picked panel has advised the fund to reduce bond holdings to stoke returns. Spokesmen at the GPIF and the health ministry, which oversees public pensions, weren’t immediately available to comment when contacted at the weekend. The Bank of Japan will continue monetary easing until 2 percent inflation is established, Governor Haruhiko Kuroda said at a branch managers’ meeting today in Tokyo. Hong Kong’s Hang Seng Index climbed 0.4 percent and a measure of Chinese shares in the city added 0.7 percent. Even as pro-democracy protests entered a fourth week, the city’s benchmark index is the best performing this month among 24 developed markets monitored by Bloomberg. Gauges of expected stock swings in Japan, Hong Kong and Korea climbed more than 14 percent last week. The Chicago Board Options Exchange Volatility Index slid 13 percent Oct. 17 as U.S. stocks rebounded. It reached a two-year high Oct. 15. Australia’s S&P/ASX 200 Index climbed a fifth day, gaining 0.9 percent. The Kospi index in Seoul rallied 1.5 percent, the most since November last year, while the NZX 50 Index (NZSE50FG) increased 1.1 percent in Wellington. Futures on the Dow Jones Industrial Average gained 0.5 percent as contracts on the Nasdaq 100 Index added 0.6 percent. China GDP China’s top Communist Party officials gather in Beijing this week for their fourth plenum, with an update on gross domestic product due tomorrow. Asia’s largest economy probably grew 7.2 percent in the third quarter from a year earlier, according to the median of 47 economists’ estimates compiled by Bloomberg. That would be a retreat from the 7.5 percent expansion recorded for the second quarter and the slowest pace of growth since 2009. Yields on 10-year Treasuries rose a third day, adding three basis points, or 0.03 percentage point, to 2.22 percent after climbing four basis points Oct. 17. Rates on Australian (GACGB10) government notes due in a decade advanced nine basis points to 3.31 percent, while yields on similar maturity New Zealand bonds increased six basis points to 4.04 percent today. ECB Action The ECB will start “within the next days” to purchase assets as part of its new program to support the economy, Benoit Coeure, an executive board member, said Oct. 17 in Riga. The Stoxx Europe 600 Index jumped 2.8 percent Oct. 17, the biggest one-day advance in almost three years, while yields on 10-year Greek debt slid 89 basis points to snap a four-day drop. An update on the euro area’s current account is due today, along with German producer prices. Morgan Stanley and General Electric Co. reported better-than-estimated earnings Oct. 17, while U.S. data showed new home construction rose in September after slumping a month earlier. Consumer confidence in the U.S. unexpectedly climbed in October to the highest level in seven years. Russia, the world’s biggest energy exporter, had its credit rating from Moody’s Investors Service cut by one level Oct. 17 to Baa2, the second-lowest investment grade. Moody’s kept a negative outlook on the rating, citing sluggish growth prospects and an erosion of Russia’s reserves amid international sanctions against the country for its involvement in the conflict in Ukraine. Oil Gains West Texas Intermediate crude climbed to $83.20 a barrel after increasing about 1.2 percent over the previous two trading days. Brent oil gained 0.2 percent to $86.34 per barrel after starting its rebound from an almost four-year low on Oct. 16. Crude has been sliding, with both oil types entering bear markets, amid concern growth in supplies is outpacing global demand for the commodity. WTI slumped 3.6 percent last week in a third week of declines, while Brent lost 4.5 percent and reached its lowest settlement price since November 2010. Wheat for December delivery retreated 0.4 percent to $5.1375 a bushel, while corn slid 0.6 percent to $3.46 on speculation drier and warmer weather in the U.S. will aid harvesting of a record crop in the world’s top grower. Soybeans declined 0.5 percent to $9.47 as rain in Brazil may boost the outlook for production.
Posted on: Mon, 20 Oct 2014 10:13:20 +0000
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