Asian Stocks Gain, Yen Weakens On Stimulus Hopes

Asian stocks rose, heading for the longest winning streak this year, the won hit a two-month high and credit risk fell for the seventh day on speculation Chinese and European central bankers will ease monetary policy. Rubber climbed after U.S. factory orders and auto sales beat estimates.

The MSCI Asia Pacific (MXAP) Index climbed for the sixth day and was up 0.4 percent as of 12:21 p.m. in Tokyo. Australia’s S&P/ASX 200 Index jumped 0.9 percent after retail sales advanced more than expected in May. Standard & Poor’s 500 Index futures were little changed. The won gained 0.3 percent to 1,134.55 per dollar. Rubber rose to a one-month high in Tokyo. Credit-default swaps in Asia are headed for their longest period of losses since February.

The European Central Bank will cut interest rates tomorrow, according to a Bloomberg survey of economists, and a government- linked newspaper in China said policy makers may cut lenders’ reserve requirements three more times this year. The International Monetary Fund said further monetary policy easing by the Federal Reserve may be needed as the organization cut its growth estimate for the world’s biggest economy.

“There is some room for the rally to last for the next couple of weeks,” Kelvin Tay, a Singapore-based chief investment officer at the wealth management unit of UBS AG, said on Bloomberg TV. “The hands of the central banks are not so tied and they can look at perhaps easing monetary policy as they try to help stimulate economies.”

Factory orders in the U.S. rose in May for the first time in three months, Commerce Department data showed yesterday. General Motors Co., Ford Motor Co. and Chrysler Group LLC reported U.S. auto sales for June that topped analysts’ estimates, helping the industry surpass projections and lifting expectations that demand for rubber tires will improve.

Services PMI

December-delivery rubber advanced as much as 3.3 percent to 259.6 yen a kilogram, the highest level for a most-active contract since June 1, before trading at 258.7 yen on the TokyoCommodity Exchange. Oil in New York fell 0.3 percent to $87.36 a barrel after surging almost 5 percent yesterday.

The Australian dollar rose 0.1 percent to $1.0289. The euro fell 0.2 percent to $1.2587 and slid 0.1 percent to 100.47 yen. Services and manufacturing output in the euro-area probably shrankin June to the lowest reading since June 2009, data from London-based Markit Economics will show today.

The ECB will lower its main refinancing rate by a quarter- percentage point to 0.75 percent, economists in a Bloomberg survey forecast. The Bank of England’s Monetary Policy Committee will raise its target for bond purchases by 50 billion pounds ($79 billion) to 375 billion pounds tomorrow, according to a Bloomberg survey.

Forecast Cut

Japan’s Nikkei 225 (NKY) Stock Average rose 0.4 percent and South Korea’s Kospi index advanced 0.3 percent. The MSCI Asia Pacific Index climbed to its highest level since May 10 and a six-day advance on the Asian benchmark would complete its longest streak of gains since December.

BHP Billiton Ltd. (BHP) jumped more than 2 percent to lead gains among commodity stocks as a surge in raw-materials prices boosted the earnings outlook at the world’s largest mining company. Komatsu Ltd. (6301), a Japanese maker of construction equipment that gets 23 percent of sales in the U.S., rose 1.8 percent. Nissan Motor Co. advanced as much as 1.3 percent as its North American sales surged 28 percent, beating the 21 percent average estimate of analysts.

The IMF said yesterday the U.S. economy will grow by 2 percent this year, cutting its previous 2.1 percent estimate. Managing Director Christine Lagarde said further monetary policy easing may be needed if the situation deteriorates.

Fed Stimulus

Weak employment figures in the U.S. may prompt the Fed to initiate fresh stimulus, BNP Paribas SA said yesterday. Labor Department nonfarm payrolls data are due July 6. U.S. financial markets are closed today for the Fourth of July holiday.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell three basis points to 166 in Singapore, Standard Chartered Plc prices show. The gauge is on track for its lowest close since May 3, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

Source: http://www.bloomberg.com/news/2012-07-04/asian-stocks-gain-yen-weakens-on-stimulus-hopes.html