Asian Stocks Extend Rally on Stimulus Optimism; Oil Gains - Bloomberg Asian Stocks Extend Rally on Stimulus Optimism; Oil Gains - Bloomberg

Thursday, June 7, 2012

Asian Stocks Extend Rally on Stimulus Optimism; Oil Gains - Bloomberg

Asian Stocks Extend Rally on Stimulus Optimism; Oil Gains - Bloomberg

Stocks rose for a third day on speculation policy makers around the world will take steps to revive the slowing economy. The Australian currency climbed toward parity with the dollar after employers unexpectedly added jobs in May. Commodities and the euro dropped.

The MSCI All-Country World Index added 0.5 percent by 8:18 a.m. in London. The MSCI Asia Pacific Index increased 1.5 percent, heading for its biggest gain since March 27, while Standard & Poor’s 500 Index futures were little changed. The Aussie strengthened to 99.46 U.S. cents, while the cost of insuring the country’s corporate bonds from default slid the most since Feb. 1. The euro weakened 0.2 percent. The S&P GSCI gauge of 24 commodities dropped for the first time in four days.

Federal Reserve Vice Chairman Janet Yellen said the U.S. economy “remains vulnerable to setbacks” and may warrant additional monetary stimulus. Bank of England Governor Mervyn King will today consider if Britain’s economy is vulnerable enough to warrant reigniting stimulus that officials halted a month ago. The number of people employed in Australia rose by 38,900 last month, the statistics bureau said.

“Any time central bankers give us a promise that they’re going to inject some more liquidity into the markets, risk assets start to rally, and that’s precisely what’s happened,” Arjuna Mahendran, the Singapore-based head of Asia investment strategy at HSBC Private Bank, which manages about $556 billion in client assets, said in a Bloomberg TV interview. “We could have a risk rally going on for a while.”

Bernanke Speech

MSCI’s all-country index climbed 2.1 percent yesterday, the biggest gain since Dec. 20, and the S&P 500 jumped 2.3 percent. Two regional Fed bank presidents who vote on policy this year, San Francisco’s John Williams and Atlanta’s Dennis Lockhart, said yesterday the central bank should be prepared to take action if the economy deteriorates further.

Fed Chairman Ben S. Bernanke is scheduled to testify on the outlook for the economy in Congress today. The policy-setting Federal Open Market Committee meets June 19 to June 20 to consider whether to add to its record easing after the economy created the fewest jobs in a year in May.

While 37 of 42 economists forecast that Britain’s Monetary Policy Committee will keep its bond-purchase target on hold at 325 billion pounds ($503 billion), Morgan Stanley and Deutsche Bank AG are among banks that have switched their view in the past week to forecast more so-called quantitative easing in response to a weakening economy.

Greece, Spain

India yesterday outlined port projects worth an equivalent of $6.3 billion for the year through March 2013, an investment target of $3.6 billion for Mumbai’s elevated rail corridor and plans to add airports. “In these difficult times we must do everything possible to revive business and investor sentiment,” Indian Prime Minister Manmohan Singh said in New Delhi.

About four stocks rose for each one that fell on the MSCI Asia Pacific Index. The gauge plunged 15 percent from a six- month high in February through June 4 as U.S. economic data trailed estimates and concern grew about Greece’s future in the euro and Spain’s deteriorating national finances.

South Korea’s Kospi index rallied 2.6 percent as the market reopened after a public holiday, while its currency strengthened 0.7 percent from its June 5 close. Samsung Electronics Co. climbed 5.2 percent even as Apple Inc. sought to block sales of Samsung’s latest Galaxy smartphones in the U.S.

Australian Jobs

BHP Billiton Ltd., the world’s largest mining company, jumped 1.5 percent in Sydney, pacing gains among Australian stocks, as the country’s resources boom drove the increase in hiring. HTC Corp. slumped to the lowest level in almost two years in Taipei trading after the company cut its second-quarter revenue forecast and Apple filed a new action seeking to stop the sale of HTC’s latest handsets in the U.S.

Australia’s data prompted traders to pare bets on interest- rate cuts as the local dollar stages its strongest rally this year. The increase in employment compares with the median estimate for no change in a Bloomberg survey of economists.

The Australian dollar jumped 2.5 percent this week as the jobs data and a gross domestic product report showing the economy expanded 1.3 percent last quarter, more than twice the level forecast, underscore the resource-fueled growth. Reserve Bank Governor Glenn Stevens cut interest rates by 75 basis points in the past two meetings, to 3.5 percent, to shore up the economy as the outlook in Europe and China deteriorates.

The Markit iTraxx Australia index of default swap contracts fell 6.5 basis points to 195.5 basis points, according to Deutsche Bank AG.

Japan Swaps

Germany’s credit-default swaps rose yesterday to exceed those on Japan’s bonds for the first time in three years as downgrades of banks in the European nation by Moody’s Investors Service highlighted the risk of debt contagion in the region.

Default swaps protecting bunds for five years rose to 104.94 basis points yesterday while Japan’s slid to 103.79, the first time Germany’s were more expensive since May 29, 2009, according to CMA prices compiled by Bloomberg. Crude oil and copper slid 0.1 percent, while nickel lost 0.2 percent.

To contact the reporters on this story: Richard Frost in Hong Kong at rfrost4@bloomberg.net; Adam Haigh in Sydney at ahaigh1@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

Enlarge image Asian Stocks Extend Global Rally on Stimulus Optimism

Asian Stocks Extend Global Rally on Stimulus Optimism

Asian Stocks Extend Global Rally on Stimulus Optimism

SeongJoon Cho/Bloomberg

The MSCI All-Country World Index climbed 2.1 percent yesterday, the biggest gain since Dec. 20, and the S&P 500 jumped 2.3 percent.

The MSCI All-Country World Index climbed 2.1 percent yesterday, the biggest gain since Dec. 20, and the S&P 500 jumped 2.3 percent. Photographer: SeongJoon Cho/Bloomberg

June 7 (Bloomberg) -- Arjuna Mahendran, the Singapore-based head of Asia investment strategy at HSBC Private Bank, talks about the outlook for additional stimulus measures by the European Central Bank and Federal Reserve, and its implications for global stocks. He speaks with Susan Li on Bloomberg Television's "First Up." (Excerpt. Source: Bloomberg)

June 6 (Bloomberg) -- Damian Thong, a Tokyo-based analyst at Macquarie Securities Ltd., talks about the global semiconductor industry. The global chip market is set to grow 7.2 percent to $322 billion in 2013 and 4.4 percent to $336 billion in 2014, World Semiconductor Trade Statistics said in a statement on its website yesterday. Thong speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)

June 7 (Bloomberg) -- Aaron Boesky, chief executive officer of Marco Polo Pure Asset Management in Hong Kong, talks about the outlook for China's stock market and economy, and his investment strategy. Boesky also discusses Chinese Communist Party leadership. He speaks with Rishaad Salamat, Susan Li, Zeb Eckert and David Ingles on Bloomberg Television's "Asia Edge." (Source: Bloomberg)

June 7 (Bloomberg) -- Sean Darby, chief global equity strategist at Jefferies Group Inc. in Hong Kong, talks about global stock and bond markets. Darby also discusses Europe's sovereign debt crisis and China's economy. He speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)

June 6 (Bloomberg) -- Atul Lele, Sydney-based equity strategist at Credit Suisse Group AG, talks about Australia stocks, the nation's currency, and his investment strategy. Lele also discusses Europe's sovereign debt crisis. He speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)



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