By Shiyin Chen and Yoshiaki Nohara - Oct 19, 2011 11:14 AM GMT+0700
Asian stocks rebounded from the biggest loss in two weeks, emerging-market currencies gained and bond risk fell amid speculation European leaders will stem the region’s debt crisis. U.S. equity futures declined after Apple Inc. (AAPL)’s profit missed analyst estimates.
The MSCI Asia Pacific Index rose 0.6 percent as of 1:10 p.m. in Tokyo. Standard & Poor’s 500 Index futures dipped 0.5 percent, and contracts on the Nasdaq-100 Index, which is dominated by Apple, lost 1 percent. The Markit iTraxx Asia index of debt default risk decreased six basis points. South Korea’s won and Malaysia’s ringgit led the region’s currencies higher, while the euro added 0.3 percent to $1.3796.
Analysts in Asia partly attributed stock gains to a Guardian newspaper report that said Germany and France agreed to boost the region’s rescue fund, even after a person with direct knowledge told Bloomberg News no deal has been reached and Moody’s Investors Service cut Spain’s credit rating. While Apple’s income trailed the average estimate by 3.5 percent, Bank of America Corp. swung to a profit and Intel Corp. forecast fourth-quarter sales that topped some analyst predictions.
“Whatever progress we get out of the euro zone will certainly help add some calm to the market,” Kelvin Tay, the Singapore-based chief investment strategist at UBS Wealth Management, said in a Bloomberg Television interview.
About two shares advanced for every one that fell on MSCI’s Asia Pacific Index, helping the gauge rebound from a 2.4 percent drop yesterday that was the steepest since Oct. 3. Japan’s Nikkei 225 Stock Average added 0.3 percent, Australia’s S&P/ASX 200 Index climbed 0.4 percent and Hong Kong’s Hang Seng Index rallied 1.3 percent.
Stocks Climb
Commonwealth Bank of Australia (CBA) gained 1 percent after Reserve Bank Assistant Governor Guy Debelle said the nation’s banks are benefiting from rising domestic deposits and U.S. investment in their debt, shielding them from stresses experienced by European lenders. TPK Holding Co., a supplier of touch panels for Apple devices, retreated 6.9 percent in Taipei.
Futures signal the S&P 500 may give up some of yesterday’s 2 percent rally. Among the 38 index members that have released quarterly results since Oct. 11, more than 60 percent have beaten analysts’ profit estimates. Apple, the world’s largest company by market value, sank 6.7 percent to $394.05 after it missed analyst estimates for the first time since at least 2004. Morgan Stanley will release its third-quarter results before the start of U.S. trading today.
‘No Conviction’
“There’s just no conviction that seems to survive,” John Carey, a Boston-based money manager at Pioneer Investments, said in a telephone interview. The firm oversees about $250 billion. “Apple’s results have disappointed some people. People are wondering where the economy is going, what earnings will look like and whether Europe will work its way through this crisis.”
Treasury 10-year yields fell one basis point to 2.16 percent before U.S. data today that may show consumer prices rose 0.3 percent in September, the median forecast in a Bloomberg News survey of economists. That would follow a 0.4 percent increase in August. Separate figures may show housing starts climbed to 590,000 last month from 571,000 in September.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell six basis points to 201 basis points, Royal Bank of Scotland Group Plc prices show. That would be the lowest closing level since Sept. 20, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.
Won, Ringgit
The won rose 1.2 percent to 1,132.15 per dollar after South Korea and Japan said they will increase a currency-swap accord to $70 billion. The Malaysian ringgit strengthened 0.8 percent to 3.1090 and the Taiwan dollar added 0.4 percent to NT$30.094.
The euro strengthened against 14 of its 16 major counterparts. The shared currency appreciated yesterday after the Guardian said Germany and France agreed before a weekend summit to boost the 440-billion euro ($604 billion) European Financial Stability Facility to 2 trillion euros.
The two nations are also in favor of recapitalizing the region’s banks to meet a 9 percent capital ratio that may be required by the European Banking Authority, the newspaper reported. A spokesman for German Chancellor Angela Merkel declined to comment.
Germany and France have yet to agree on how to bolster the European bailout fund as they seek to overcome technical hurdles and to complete a plan to stem to debt crisis, said a person with direct knowledge of the talks. FTSE 100 Index futures jumped 1.3 percent.
‘Premature’
The proposed increase to “the European Financial Stability Fund is really significant and the market viewed that as a high positive,” said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “Still, at this stage, it looks all premature and nothing has been agreed.”
Oil for November delivery retreated 0.3 percent to $88.12 a barrel in afterhours electronic trading on the New York Mercantile Exchange. Futures advanced 2.3 percent yesterday to settle at the highest price since Sept. 15, helping the S&P GSCI Index of commodities to a 0.7 percent gain.
Three-month copper declined 1 percent to $7,374.25 a metric ton on the London Metal Exchange, a third day of losses. Wheat for December delivery advanced as much as 1 percent to $6.3175 a bushel before trading at $6.2725.
To contact the reporters on this story: Shiyin Chen in Singapore at schen37@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net.
To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net.
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