Australian Stock Futures Rise on China Stimulus Outlook

By Adam Haigh - Jul 16, 2012 7:11 AM GMT+0800 Australian stock futures rose amid speculation China may take more economic stimulus measures, boosting the earnings outlook for companies that generate sales in the Pacific nation’s biggest trading partner. American Depositary Receipts of BHP Billiton Ltd. (BHP), the world’s largest mining company, gained 1.3 percent. Shares of Whitehaven Coal Ltd. (WHC) may be active after a group led by Australian Nathan Tinkler offered to buy the rest of the miner at a 51 percent premium to its most recent closing price, valuing the company at A$5.3 billion ($5.4 billion). ADRs of Cnooc Ltd. (883), China’s largest offshore oil producer, rose 0.8 percent as crude prices advanced for a fourth day. Futures on Australia’s S&P/ASX 200 Index advanced 0.8 percent to 4,082 as of 6:59 a.m. in Sydney. Japan’s equity markets are closed today for a public holiday. New Zealand’s NZX 50 Index rose 0.3 percent in Wellington. “There remains significant capacity for China to stimulate further,” said George Boubouras, Melbourne-based head of investment strategy at UBS AG’s Australian wealth-management unit. The Swiss bank has about $1.5 trillion in assets under management. “This is not only from a monetary perspective, which includes further rate cuts or lowering the reserve required ratio again, but also the ability for additional targeted fiscal stimulus.” Futures on the Standard & Poor’s 500 Index fell 0.2 percent today. The underlying gauge gained 0.2 percent last week as a rally in JPMorgan Chase & Co. (JPM) and speculation China will boost stimulus measures tempered concern about earnings and the global economy. JPMorgan jumped 6.4 percent for the week as Chief Executive Officer Jamie Dimon said the bank will probably post record earnings for 2012 even after reporting a $4.4 billion trading loss. China Rates China’s central bank may cut interest rates by as much as one percentage point in the coming year to spur lending, the swap market signals, as slowing industrial production and exports cool the economy. China needs to expand consumption and restructure the economy, Vice Premier Li Keqiang said during an inspection tour in central Hubei province, the official Xinhua News Agency reported July 15. This comes two days after a report showed China’s gross domestic product expanded 7.6 percent in the second quarter from a year earlier, the slowest pace in three years. China’s Premier Wen Jiabao warned the momentum for a recovery in economic growth isn’t yet in place and that “difficulties” may persist for a while, the official Xinhua News Agency reported. ‘Bearing Fruit’ Even so, the current pace of economic expansion is within the targeted range and government measures to stabilize growth are “bearing fruit,” the premier said during an inspection tour in southwest Sichuan province, according to Xinhua yesterday. The article didn’t mention government policies for the property market. China is facing downward pressure on economic growth and will maintain “proactive” fiscal policy in 2012, the People’s Bank of China said in its stability report on its website after the close of Hong Kong and Chinese markets on July 13. The MSCI Asia-Pacific (MXAP) fell 2.8 percent last week, the largest weekly drop since May, amid concern slowing economic growth from China and Korea to Australia will hurt corporate profits. Investors are demanding policymakers do more to stimulate growth even after central banks in China, Europe, Taiwan, South Korea and Brazil cut interest rates in the past fortnight to bolster economies against the impact of Europe’s debt crisis and the faltering recovery in the U.S. Commodities Rise The MSCI Asia Pacific Index fell 11 percent from its 2012 high on Feb. 29 through July 13, paring this year’s gain to 1.3 percent. Shares in the measure are valued at 11.7 times estimated earnings on average, compared with 13.1 times for the Standard & Poor’s 500 Index and 10.7 times for the Stoxx Europe 600 Index. The Thomson Reuters/Jefferies CRB Index of raw materials climbed 1.3 percent July 13. West-Texas Intermediate crude oil futures advanced 0.1 percent today, gaining for a fourth day. The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in New York gained 1.3 percent to 87.77 on July 13, trimming its loss last week to 3.7 percent.

Asian Stocks Snap Six-Day on European Economic Slowdown

By Jonathan Burgos - Jul 5, 2012 10:14 AM GMT+0800 Asian stocks fell, with the regional benchmark index headed for its first loss in seven days, as a worsening economic slump in Europe overshadowed expectations the European Central Bank will cut interest rates today. Esprit Holdings Ltd. (330), a clothier that counts Europe as its largest market, slid 1.5 percent in Hong Kong. Aquarius Platinum Ltd. tumbled 8.9 percent in Sydney after saying output will decline. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest publicly traded lender by market value, gained 1 percent in Tokyo after Bank of Japan Governor Masaaki Shirakawa said today the BOJ will continue monetary easing. The MSCI Asia Pacific Index (MXAP) lost 0.4 percent to 118.77 as of 11:12 a.m. in Tokyo, with almost three shares falling for every two that rose. The gauge climbed yesterday to its highest level since May 10 after euro-zone leaders last week agreed to relax conditions for rescuing lenders, easing concern about the region’s debt crisis. “The market remains skeptical that policy measures in Europe will be in place in a timely fashion,” said Tim Schroeders, a portfolio manager who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “Significant details still need to be addressed, but for the time being the initiatives to tackle the debt crisis have broadened.” Japan’s Nikkei 225 Stock Average (NKY) lost 0.1 percent after swinging earlier gaining as much as 0.3 percent. Australia’s S&P/ASX 200 Index fell 0.2 percent. Hong Kong’s Hang Seng Index both dropped 0.4 percent, while China’s Shanghai Composite Index declined 1.2 percent.

FOREX-Euro, sterling on defensive as central bank action eyed

FOREX-Euro, sterling on defensive as central bank action eyed By Ian Chua SYDNEY, July 5 (Reuters) - The euro wallowed near one-week lows on Thursday, struggling to find any traction ahead of a widely expected interest rate cut by the European Central Bank. The single currency traded at $1.2522 early in Asia, having fallen around 0.7 percent on Wednesday in trading made subdued by a U.S. holiday. Surveys showing all of Europe's biggest economies are in recession or heading there added to the gloom. Support is seen around $1.2495, the 76.4 percent retracement of Friday's dramatic rally sparked by an EU deal to tackle the region's debt crisis. Traders said part of the euro's weakness overnight was due to heavy selling against the Swedish crown, which surged to an 11-1/2 year high after the Swedish central bank kept interest rates on hold at 1.5 percent. Traders said the absence of stronger hints on future rate cuts by the Riksbank saw the crown squeeze higher, pushing the euro down some 1 percent to as far as 8.6495 crowns, lows not seen since late 2000. The euro also lost ground on the yen, slipping to 100.06 from Wednesday's session high of 100.65. It hit a fresh all-time low on the New Zealand currency at NZ$1.5541 . Softness in the single currency saw the dollar index bounce to 82.199, off Friday's trough of 81.430. Against the yen, the greenback held firm at 79.92, continuing to slowly recover from a low of 79.08 set last Friday. With expectations mounting that the ECB, Federal Reserve and also the Bank of England will have to do more to stimulate their respective economies, the market continued to favour high-beta currencies. The Australian dollar, already lifted by upbeat retail sales data on Wednesday, was at $1.0270, having climbed as high as $1.0320 -- its best level since early May. The ECB is due to announce its decision at 1145 GMT, followed by a news conference at 1230 GMT. A Reuters poll of economists showed the majority expect the ECB to cut its main rate by 25 basis points to 0.75 percent. They were evenly split on whether the ECB will lower its deposit rate. A reactivation of the ECB's bond-buy plan, however, is seen unlikely for now, although it is the tool many investors would like it to use to cap the bond yields of countries embroiled in the euro zone crisis. Barclays Capital analysts expect the ECB to lower its main rate by a more aggressive 50 basis points and see a quarter point cut as well to the deposit rate to zero. "We suggest that selling the EUR and buying a relatively 'high beta' currency, such as the AUD, would perform well in light of a more aggressive ECB response to the problems," they wrote in a note. The BOE is expected to launch a third round of monetary stimulus as it moved to counter a recession and the effects of a worsening debt crisis in the euro zone. That is weighing on sterling, which has fallen to $1.5592 , down more than a full U.S. cent from Friday's peak.