By Rob Verdonck and Shiyin Chen - Oct 24, 2011 6:17 PM GMT+0700
Oct. 24 (Bloomberg) -- Ryoji Musha, president of Musha Research Co., talks about the outlook for Japan's economy, currency and stock market. Japan’s exports increased more than expected in September, a sign the recovery in shipments is withstanding a weakening global economy. Musha also discusses Federal Reserve monetary policy and Europe's sovereign debt crisis. He speaks from Tokyo with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
The euro weakened, two-year German note yields fell the most in a week and stocks pared gains as European leaders inched toward a resolution of the region’s debt crisis. Industrial metals led a jump in commodities amid signs of growth in China and Japan.
Europe’s single currency depreciated against all but three of its 16 major peers at 7:02 a.m. in New York. The two-year German note yield declined six basis points. The MSCI All Country World Index climbed 0.4 percent after advancing as much as 0.8 percent earlier. Standard & Poor’s 500 Index futures fell 0.2 percent. Copper and zinc rallied more than 3 percent. Oil rose 0.4 percent in New York.
European leaders yesterday held their 13th crisis summit in 21 months, debating how to cut Greece’s debt burden, boost the firepower of the region’s bailout fund and bolster banks ahead of a further meeting on Oct. 26. Reports today showed China’s manufacturing may grow in October for the first time in four months and Japanese exports rose more than expected last month.
“It was encouraging that there was no clear sign of divisions among European leaders, but there is also some disappointment that nothing concrete was announced at the weekend,” Nader Naeimi, a Sydney-based strategist for AMP Capital Investors Ltd., said in a telephone interview.
Euro Weakens
The euro weakened 0.5 percent to $1.3833. Foreign-exchange strategists have ceased cutting forecasts for the currency, drawing the line at $1.34, according to estimates compiled by Bloomberg since Oct. 6.
Spanish 10-year yields rose four basis points today, widening the spread over similar-maturity German bunds to 347 basis points. Italian 10-year bonds also declined. The cost of insuring European sovereign debt increased, with the Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments climbing five basis points to 329.
The Stoxx Europe 600 was little changed. BHP Billiton Ltd. and Rio Tinto Group added more than 3 percent. Nobel Biocare Holding AG surged 9.5 percent in Zurich following a report that buyout firms are looking at the maker of dental implants.
Chemical, metal and agricultural companies around the world have fallen to valuations whose only precedent came in the last recession. Commodity producers in the MSCI All-Country World Index lost 21 percent since the second quarter and trade for 10.6 times reported income, cheaper than 96 percent of days since 1995, according to data compiled by Bloomberg.
National Bank of Greece SA and Alpha Bank SA tumbled more than 18 percent today as a Greek government official said the euro area is committed to seeking deeper losses for holders of Greek bonds. The official spoke on condition of anonymity.
U.S. Earnings
S&P 500 futures erased an earlier advance of as much as 0.6 percent. The gauge last week closed at its highest level since Aug. 3 amid speculation that the Federal Reserve may seek further monetary easing. Seventy-four percent of the 106 companies in the index that have reported earnings since Oct. 11 exceeded analysts’ profit estimates, Bloomberg data show.
Treasury 30-year bonds snapped a four-day decline, pushing the yield down four basis points to 3.23 percent.
U.S. gross domestic product, the value of all goods and services produced, rose at a 2.5 percent annual rate after advancing 1.3 percent in the previous three months, according to the median forecast of 68 economists surveyed by Bloomberg News before the Commerce Department’s Oct. 27 release. Orders for business equipment increased in September and new-home sales stabilized, other data may show this week.
Asian Stocks
Japan’s Nikkei 225 (NKY) Stock Average added 1.9 percent after the Ministry of Finance said exports rose 2.4 percent last month from a year earlier. The median estimate of 26 economists surveyed by Bloomberg was for a 1 percent increase after a 2.8 percent gain in August.
Hong Kong’s Hang Seng Index climbed 4.1 percent and the Shanghai Composite Index gained 2.3 percent after HSBC Holdings Plc and Markit Economics reported a preliminary October reading of 51.1 for a index of Chinese purchasing managers, the highest in five months.
Zinc jumped 3.3 percent, copper rallied 3.5 percent and aluminum advanced 2.7 percent. China is the biggest buyer of industrial metals. The S&P GSCI index of 24 commodities gained 0.6 percent after rising 1 percent on Oct. 21. Oil in New York traded as high as $88.65 a barrel.
The MSCI Emerging Markets Index added 2.2 percent, the most in two weeks, as the Hang Seng China Enterprises Index of Chinese shares traded in Hong Kong jumped 4.9 percent, while benchmark indexes in South Korea and Taiwan climbed at least 3 percent. Russia’s Micex Index advanced 0.7 percent and Hungary’s BUX Index rose 1.2 percent.
Turkey’s lira was 0.6 percent higher against the dollar while the ISE National 100 Index of shares fell 0.8 percent. Turkey was struck yesterday by the most powerful earthquake in more than a decade.
To contact the reporters on this story: Rob Verdonck in London at rverdonck@bloomberg.net; Shiyin Chen in Singapore at schen37@bloomberg.net
To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net
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