Asian Stocks Gain on Acquisition, Dollar Weakens on G-20 Pledge
Oct. 25 (Bloomberg) -- Asian stocks rose the most in a week, after Japanese exports climbed more than expected and Singapore Exchange Ltd. agreed to buy Australia's stock market operator. The dollar weakened and commodities advanced after Group of 20 finance leaders said they will limit currency intervention.
The MSCI Asia Pacific Index gained 1.2 percent to 131.49 as of 1:20 p.m. in Tokyo. Standard & Poor's 500 Index futures advanced 0.9 percent. The Dollar Index dropped 0.7 percent. Rice and copper led gains in commodities.
Investor confidence climbed as Singapore Exchange offered A$8.4 billion ($8.3 billion) to buy ASX Ltd. and Japan's exports rose 14.4 percent in September from a year earlier. The median estimate of 21 economists surveyed by Bloomberg News was for a 9.6 percent gain. Overseas sales increased even after the yen strengthened 10.9 percent this year. G-20 officials vowed to refrain from "competitive devaluation" and to let markets set foreign-exchange values as they sought to calm concerns that nations will use cheaper currencies to spur growth.
"Confidence in the global economy is strong, compared with a couple months ago when the market was more concerned about fiscal risks," said Hidehiro Tomioka, who helps manage $1.4 billion in Tokyo at MFC Global Investment Management (Japan) Ltd. "Merger activity is one trend that may continue, supported by good cash flow. If these companies were worried about a double- dip, they would be cautious in expanding their businesses."
ASX shares surged 20 percent after resuming trading in Sydney, driving the S&P/ASX 200 Index 1.5 percent higher. Singapore Exchange declined 4.9 percent.
KDDI Corp. rose 8.6 percent in Tokyo after Japan's second- largest mobile-phone operator announced a 100 billion yen ($1.2 billion) stock buyback.
U.S. Profits
Futures on the S&P 500 increased following Friday's 0.2 percent increase, a third straight week of gains for the U.S. benchmark. More than 85 percent of S&P 500 companies that have posted third-quarter results since Oct. 7 topped the average analyst profit projection.
The dollar fell toward a one-week low against the euro, dropping to $1.4034 per euro, near its weakest since Oct. 15, from $1.3954 on Oct. 22. It declined 0.4 percent to 81.05 yen, close to its 15-year low of 80.85 reached on Oct. 20. The euro gained to 1.3646 Swiss francs, the most since Aug. 11, before trading at 1.3658 from 1.3632 on Oct. 22.
The Australian dollar increased to within one U.S. cent of parity after a report showed producer prices rose faster than economists estimated, adding to prospects the central bank will raise interest rates next month. The Aussie touched 99.37 U.S. cents in Sydney, from 98.28 cents in New York on Oct. 22. It advanced to 80.54 yen from 79.97 yen.
Geithner, China
G-20 policy makers called for more sustainable current- account gaps without embracing a U.S. proposal for targets, as they ended talks in South Korea on Oct. 23. The G-20 Seoul Summit will be held on Nov. 11 and 12.
U.S. Treasury Secretary Timothy F. Geithner said he expects China will let the yuan to strengthen as officials there understand it's in the interest both of domestic growth and global economic stability. Yuan forwards recovered from their steepest slide in 22 months. The contracts climbed 0.4 percent to 6.4505 per dollar in Hong Kong, reflecting bets the currency will strengthen 3.2 percent from the spot rate of 6.6567, according to data compiled by Bloomberg.
Cotton jumped to a record on concern that global demand, especially from China, may exceed supply after a hailstorm last week damaged crops in Texas, the biggest U.S. exporter. Cotton for December delivery rose 4.2 percent to $1.2471 a pound, the highest level since the fiber started trading 140 years ago, on ICE Futures U.S. in New York. Rice futures climbed to a nine- month high in Chicago, gaining as much as 1.6 percent to $14.745 per 100 pounds, and traded at $14.725 in Asia.
Metals Rally
Copper advanced toward a 27-month high, while zinc and lead increased to their highest level since January, as industrial metals rallied on demand from investors seeking to protect their wealth against a decline in the dollar.
Copper for three-month delivery gained 1.9 percent to $8,490 a metric ton on the London Metal Exchange. The metal reached $8,492 a ton on Oct. 19, the highest since July 2008.
Zinc jumped 2.1 percent to $2,565 a ton and lead 1.8 percent to $2,575 a ton on the LME, the highest levels since January, after China's third-largest zinc producer shut its biggest zinc and lead smelter. Nickel advanced 2.5 percent to $23,800 a ton and tin climbed 1.5 percent to $26,800 a ton.
"Metals have moved beyond their fundamentals now and it's basically speculative demand linked to a weaker dollar that's supporting higher prices," said Sun Zhiyin, an analyst at Shanghai Continent Futures Co.
Hurricane Richard
Oil gained for a second day, rising 1 percent to $82.51 a barrel in New York, as the dollar weakened and Hurricane Richard approached the southern Gulf of Mexico.
"Richard could provide some support as it moves through Mexico's key oil-producing region," Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, wrote in a note today. "Computer forecasting models suggests the storm will not hit major oil installations in the U.S. Gulf."
The cost of protecting bonds from default in Japan and Australia fell to the lowest in almost two weeks.
The Markit iTraxx Japan index of credit-default swaps dropped 4.5 basis points to 102.5 basis points, Morgan Stanley prices show. The risk benchmark is headed for its lowest level since Oct. 14, according to CMA prices. The Markit iTraxx Australia index fell 2 basis points to 108 basis points, according to Nomura Holdings Inc. The index is on course for its lowest level since Oct. 15, CMA prices show.
To contact the reporters on this story: Kana Nishizawa in Tokyo at knishizawa5@bloomberg.net Clyde Russell in Singapore at crussell7@bloomberg.net
To contact the editor responsible for this story: Patrick Chu in Tokyo at pachu@bloomberg.net .
Find out more about Bloomberg for iPhone: http://m.bloomberg.com/iphone/Víctor Lei
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