Japan Stocks Rise on Bridgestone, Nippon Electric Glass Targets

By Masaki Kondo

June 26 (Bloomberg) -- Japanese stocks rose, extending a weekly gain, as forecasts by Bridgestone Corp. and Nippon Electric Glass Co. lifted optimism earnings are recovering.

Bridgestone, the world’s largest tiremaker, leapt 8.5 percent after narrowing its first-half loss forecast. Nippon Electric gained 6.3 percent after increasing its profit target. Nippon Oil Corp. climbed 3.1 percent after saying it’s bidding for an oil project in Iraq. Japan Real Estate Investment Corp. jumped 4.7 percent after Morgan Stanley raised its view on the nation’s real estate investment trusts to “attractive.”

“Bridgestone’s forecast gave us evidence that company earnings will start to rebound,” said Naoki Fujiwara, who oversees the equivalent of $3.7 billion at Shinkin Asset Management Co. “Investors still believe the global economy will start to recover later this year and this confidence is leading to resilience in the market.”

The Nikkei 225 Stock Average gained 81.31, or 0.8 percent, to close at 9,877.39 in Tokyo. The broader Topix index rose 7.03, or 0.8 percent, to 926.80, with more than three stocks rising for each that fell. Both gauges climbed 0.9 percent in the past five days, bouncing back from a decline last week.

The estimated price-earnings ration on the Topix is 42.7 times, the highest among the benchmark gauges of the world’s five-biggest stock markets, according to Bloomberg data.

To contact the reporters for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.

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Asian Stocks Rise on Growth Optimism; Nippon Electric Advances

By Jonathan Burgos and Masaki Kondo

June 26 (Bloomberg) -- Asian stocks rose as Bridgestone Corp. narrowed its loss forecast, commodity prices jumped and a government report showed the U.S. economy shrank less than expected in the first quarter.

Bridgestone, the world’s largest tiremaker, climbed 8.5 percent in Tokyo. Alumina Ltd., partner in the world’s biggest producer of the material used to make aluminum, surged 9.1 percent in Sydney. Nippon Electric Glass Co., the world’s No. 3 maker of glass for flat-panel televisions, gained 6.3 percent after increasing its earnings estimate.

“Bridgestone’s forecast gave us evidence that company earnings will start to rebound,” said Naoki Fujiwara, who oversees the equivalent of $3.7 billion at Shinkin Asset Management Co. in Tokyo. “Investors still believe the global economy will start to recover later this year and this confidence is leading to resilience in the market.”

The MSCI Asia Pacific Index gained 1.2 percent to 103.07 as of 3:12 p.m. in Tokyo. The increase took the measure’s weekly advance to 1.6 percent, recouping some of last week’s 3.5 percent drop. Optimism government stimulus measures worldwide will revive the global economy has boosted the gauge by 46 percent from a more than five-year low on March 9.

Japan’s Nikkei 225 Stock Average added 0.8 percent to 9,877.39, led by Furukawa Electric Co., which jumped 6 percent after Morgan Stanley raised its share-price estimate. Japanese stocks rose even as a government report showed the country’s consumer prices fell at a record pace in May.

Hong Kong’s Hang Seng Index gained 1.2 percent, with China Cosco Holdings Co. climbing 6.9 percent after its chairman said freight rates are set to advance. China’s Shanghai Composite Index added 0.2 percent as the country’s statistics bureau said industrial companies’ profits fell at a slower pace.

Slower Contraction

Futures on the Standard & Poor’s 500 Index fell 0.3 percent. The gauge increased 2.1 percent, the most since June 1, in New York. A government report showed gross domestic product shrank by 5.5 percent last quarter, less than the 5.7 percent decrease forecast by economists. That data countered a separate report showing jobless claims unexpectedly rose last week.

The MSCI Asia Pacific Index’s gain this week, the fifth advance in six weeks, came amid signs the global economy is strengthening. The U.S. Federal Reserve said the pace of economic contraction is slowing, while South Korea raised its gross domestic product forecast. Singapore’s industrial production increased in May, a government report today showed.

“Uncertainty over the global economy has receded,” said Kazuhiro Takahashi, a general manager at Tokyo-based Daiwa Securities SMBC Co. “Business conditions aren’t as bad as some have feared and I’m expecting companies to lift their targets.”

Copper, Oil Prices

Bridgestone jumped 8.5 percent to 1,520 yen. The company narrowed its first-half net loss forecast to 46 billion yen ($480 million) from 62 billion yen, citing reduced costs.

Nippon Electric Glass surged 6.3 percent to 1,054 yen. The company said yesterday operating profit will likely be 10 billion yen in the three months to June 30, twice its previous forecast. Demand for LCD glass is expected to remain “robust,” the company said in a filing to the exchange.

Australia’s Alumina gained 9.1 percent to A$1.505. Komatsu Ltd., which gets 86 percent of sales supplying mining and construction machinery, added 1.6 percent to 1,530 yen.

A gauge of six primary metals in London advanced for a third day to the highest level in two weeks. Copper futures for September delivery rose 1.5 percent in New York.

Rising Valuations

Inpex Corp., Japan’s largest oil explorer, added 1.8 percent to 754,000 yen. Woodside Petroleum Ltd., Australia’s second-largest oil producer, rose 1.8 percent to A$42.80. Crude oil jumped 2.3 percent to $70.23 a barrel in New York yesterday, a level not seen since June 18. Futures gained 0.8 percent in after-hours trading.

Materials and energy companies are the MSCI Asia Pacific Index’s best performing industry groups this year on speculation a global economic recovery will boost demand for commodities.

The rally since March drove the average valuation of companies in the gauge to 1.5 times the net value of assets as of June 12, according to Bloomberg data. That was the highest level since Sept. 26. The gauge sank 3.5 percent last week, its first weekly drop in five.

“I see this as a very strong bear market rally,” said Hugh Young, who helps oversee $30 billion as Asian managing director for Aberdeen Asset. “We fully admit that things have stopped plunging and that in a sense the way business is done has normalized, but most of the companies we have contact with are saying business is still very, very tough.”

Emerging Markets

Emerging-market stock funds lost $1.87 billion in the week ended June 24, the first week of net outflows since early March, on concern that a rebound in exports will be delayed, EPFR Global said.

Furukawa Electric, which makes wires and cables, jumped 6 percent to 439 yen, while Hitachi Cable Ltd. climbed 7.5 percent to 314 yen. Morgan Stanley increased a 12-month price estimate on Furukawa Electric shares to 560 yen from 410 yen. Hitachi Cable had its target price more than doubled to 290 yen.

China Cosco, the world’s largest operator of dry bulk ships, climbed 6.9 percent to HK$9.76. Chairman Wei Jiafu said yesterday “the BDI will have a V-shape rebound after its dive,” referring to the Baltic Dry Index, a measure of shipping rates. The gauge has fallen 9.1 percent in the last five days.

To contact the reporters for this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Masaki Kondo in Tokyo at mkondo3@bloomberg.net.

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Short Selling of S&P 500 Increases for First Time Since March

By Matt Townsend

June 25 (Bloomberg) -- Bets against the Standard & Poor’s 500 Index rose for the first time since March as investors increased short sales of health-care companies including Merck & Co. and Cardinal Health Inc.

Short interest on the S&P 500 climbed to 9.8 billion shares as of June 15, a gain of almost 1 percent from two weeks earlier, according to data compiled by U.S. exchanges and Bloomberg and released yesterday. Wagers against health-care shares rose more than 7 percent, the most of 10 groups, to 890.3 million as President Barack Obama proposed an industry overhaul.

“Anything that’s done could be detrimental to the health- care industry in terms of long-term business prospects,” said Michael Cuggino, who as chief executive officer of San Francisco-based Pacific Heights Asset Management LLC helps manage $3.8 billion. “There’s unease. What policies are ultimately passed could be limiting future earnings of certain companies.”

Investors became more pessimistic on the health-care industry as Obama prepared a plan that aims to force greater efficiency in Medicare, reduce drug costs and cut the number of uninsured Americans. He said on June 13 that the proposal might save $313 billion for the government over the next 10 years.

U.S. stock exchanges release data on short selling, or the sale of borrowed stock with the hope of buying it back at a lower price, every two weeks. Yesterday’s report showed the first increase in bets that equities would drop since March 31.

Merck, Cardinal Health

Short interest on Merck, the Whitehouse Station, New Jersey-based drugmaker, rose 18 percent to 134 million shares. Bets against Cardinal Health, the Dublin, Ohio-based drug distributor, surged 89 percent to 5.41 million shares.

The S&P 500 plunged 38 percent last year, the biggest annual decline since the Great Depression, and sank to a 12-year low in March 2009. The measure rebounded 40 percent through June 12, the steepest rally in seven decades, on speculation that government efforts to end the first global recession since World War II are working. It then fell 5.6 percent through June 22, spurring concern that the three-month advance will be wiped out.

“The higher stock market averages go and stocks go, people get concerned there could be a correction,” Cuggino said.

Bets against financial institutions dropped almost 2.5 percent to 3.18 billion shares. Wagers against Minneapolis-based Ameriprise Financial Inc. sank the most, declining 31 percent.

To contact the reporter on this story: Matt Townsend in New York at mtownsend9@bloomberg.net.

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U.S. Futures Fluctuate; Bed Bath & Beyond May Advance

By Adam Haigh

(Corrects to remove reference to German trading in second and ninth paragraphs.)

June 25 (Bloomberg) -- U.S. stock-index futures drifted between gains and losses as better-than-estimated earnings from Bed Bath & Beyond Inc. offset a slump in orders at Nike Inc.

Bed Bath & Beyond may advance as the largest U.S. home- furnishing retailer said it cut costs by 2.4 percent. Jefferies Group Inc., the New York-based brokerage that specializes in mid-sized companies, may climb after forecasting record revenue for the second quarter. Nike, the world’s biggest athletic-shoe maker, fell 3.3 percent as it said orders declined 12 percent because of the global recession.

Futures on the Standard & Poor’s 500 Index expiring in September slipped 0.1 percent to 897.1 at 11:20 a.m. in London, after gaining as much as 1.2 percent earlier. The index has lost 4.8 percent since June 12 after a 40 percent rebound from its March lows left the measure trading at 14.9 times its companies’ earnings, near the highest since October. Dow Jones Industrial Average futures rose 0.1 percent to 8,267 today, and Nasdaq-100 Index futures were little changed at 1,447.75.

“We increased our exposure to equities ever so slightly,” said Monika Rosen, head of research at Bank Austria Asset Management in Vienna, which oversees about $41 billion. “We are not entirely sure the market will get another setback and not get another reality check from fundamental data,” she told Bloomberg Television.

An index of home prices in 25 metropolitan areas climbed in April for the first time since peaking in June 2007, according to a report by Radar Logic Inc. The RPX Composite Index, which measures the price per square foot of residential properties in and around major cities, rose 1.2 percent from March, New York- based research firm Radar Logic said in a report released today.

Bond-Purchase Program

Most U.S. stocks advanced yesterday as durable goods orders unexpectedly jumped and earnings topped estimates at Oracle Corp. Equities pared gains and the Dow average fell as the Federal Reserve disappointed investors by not increasing its bond-purchase program.

Fed policy makers yesterday voted to maintain the size and pace of their $1.75 trillion program to buy mortgage debt and Treasuries. The central bank said it sees a “gradual resumption of sustainable” growth.

Bets against the S&P 500 rose for the first time since March as investors increased short sales of health-care stocks including Merck & Co. and Cardinal Health Inc. Short interest on the index climbed to 9.8 billion shares as of June 15, a gain of almost 1 percent from two weeks earlier, according to data compiled by U.S. exchanges and Bloomberg and released yesterday.

Bed Bath & Beyond

Bed Bath & Beyond jumped 5.9 percent to $30.06 in after- hours trading yesterday. Net income increased to 34 cents a share from 30 cents a year earlier. Analysts anticipated earnings of 25 cents a share, according to the average of 18 estimates compiled by Bloomberg.

Jefferies added 7.5 percent to $21.98 in after-hours trading yesterday after saying sales may exceed $500 million in the quarter ending June 30. Revenue is expected to be $325 million in the period, according to the average estimate of six analysts surveyed by Bloomberg News.

Nike dropped 3.3 percent to $51.26 in Germany. Excluding the effect of currency exchange rates, worldwide orders for delivery from June through November fell 5 percent from a year earlier. Sara Hasan, an analyst with McAdams Wright Ragen Inc. in Seattle, projected orders would decline 2 percent at most, on that basis.

Warren Buffett followers who invest like the billionaire instead of with him would have earned higher returns since the bear market bottomed more than three months ago.

Economy Watch

Berkshire Hathaway Inc.’s 19 percent advance since U.S. equity indexes reached their lows on March 9 lags behind 15 of the company’s top 20 stock holdings. A $1 million investment mimicking Berkshire’s portfolio would have produced a $682,300 profit through yesterday, compared with a $185,900 gain for the same-sized investment in Berkshire shares. Buffett is chairman and head of investing at Berkshire.

A government report today may show first-time jobless claims fell last week, adding to evidence the recession is easing. Initial jobless claims probably dropped to 600,000 last week from 608,000 the previous week, according to a Bloomberg News survey of economists before the Labor Department report.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.

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Bed Bath & Beyond, Jazz, Jefferies, Nike: U.S. Equity Preview

By Lu Wang

June 25 (Bloomberg) -- Shares of the following companies may have unusual moves in U.S. trading. Stock symbols are in parentheses.

Acxiom Corp. (ACXM US): The computer-services company said it expects to earn 7 cents a share at most in the fiscal first quarter. Robert W. Baird Ltd. estimated profit of 19 cents.

Bed Bath & Beyond Inc. (BBBY US): The largest U.S. home- furnishings retailer reported first-quarter profit of 34 cents a share, beating the average analyst estimate by 38 percent, according to Bloomberg data.

Cigna Corp. (CI US): The life and health insurance company said Chief Executive Officer Edward Hanway will retire at the end of the year and be succeeded by David M. Cordani.

Jazz Pharmaceuticals Inc. (JAZZ US): The Palo Alto, California-based drugmaker said results from a study on its treatment of fibromyalgia showed a “highly significant” decrease in pain and fatigue.

Jefferies Group Inc. (JEF US): The New York-based brokerage that specializes in mid-sized companies said it expects second- quarter revenue of more than $500 million. That topped the average analyst estimate of $325.8 million in a Bloomberg survey.

Nike Inc. (NKE US): The world’s largest athletic-shoe maker said worldwide orders declined 12 percent.

To contact the reporter on this story: Lu Wang in New York at lwang8@bloomberg.net

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