By Shiyin Chen - Nov 28, 2011 9:22 AM GMT+0700
Nov. 28 (Bloomberg) -- Graham Bibby, chief executive officer at Richmond Asset Management Ltd., talks about Europe's debt crisis, the outlook for global financial markets and his investment strategy. Bibby also discusses Federal Reserve monetary policy. He speaks in Hong Kong with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
Nov. 28 (Bloomberg) -- John Vail, chief global strategist and head of asset allocation at Nikko Asset Management in Tokyo, talks about Europe's debt crisis and investment strategy. He speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
Asian stocks (MXAP) advanced for the first time in four days, U.S. equity-index futures climbed and the euro strengthened against the dollar and yen amid speculation European policy makers are taking steps to stem the debt crisis and as America’s Thanksgiving retail sales jumped to a record.
The MSCI Asia Pacific Index added 2.1 percent at 10:34 a.m. in Tokyo. Standard & Poor’s 500 Index futures jumped 2.2 percent, signaling the U.S. gauge may end a seven-day drop. Treasuries slid and the Dollar Index headed for the biggest drop in more than two weeks. The euro climbed 0.6 percent to $1.3318 and New Zealand’s dollar rose against all 16 major peers after Prime Minister John Key was re-elected. Oil rallied 1.7 percent in New York and copper jumped 3.1 percent in London.
About $4.7 trillion has been wiped out from global equity values this month as concern Europe’s crisis will spread spurred a surge in Italian borrowing costs. The International Monetary Fund is preparing a 600 billion euro ($799 billion) loan for Italy in case the debt burden worsens, La Stampa reported, without saying where it got the information. U.S. retail sales during Thanksgiving climbed 16 percent to a record.
“This is just one more bullet that’s added to the arsenal for solutions on the European crisis,” John Vail, chief global strategist and head of asset allocation at Nikko Asset Management, said in a Bloomberg Television interview from Tokyo. There are “a lot of good things going on that’s not recognized by the market right now. It’s not all bad news,” he said.
Stocks Rebound
Almost 11 shares increased for every one that declined on MSCI’s Asia Pacific Index, which slumped 4.6 percent last week, the most since the five days ended Sept. 23. The gauge is valued at 12.3 times estimated profits, lower than the five-year average multiple of 16.4 times, according to data compiled by Bloomberg. Japan’s Nikkei 225 Stock Average climbed 2 percent, Australia’s S&P/ASX 200 Index gained 2.1 percent, and South Korea’s Kospi Index advanced 2.1 percent.
LG Electronics Inc. (066570) surged 8.2 percent and Li & Fung Ltd. rallied 6.2 percent, pacing gains among companies that export to the U.S. Qantas Airways Ltd. (QAN) advanced 5.2 percent, the first gain in eight days, after Australia’s biggest carrier predicted profit that beat analysts’ expectations.
S&P 500 futures expiring in December signal the equity index may rebound from a seven-day, 7.9 percent slump that was its longest losing streak since August. Retail sales totaled $52.4 billion during the holiday weekend and the average shopper spent $398.62, up from $365.34 a year earlier, the Washington- based National Retail Federation said yesterday, citing a survey conducted by BIGresearch. Treasury 10-year yields increased five basis points to 2.01 percent.
Dollar, Euro
The Dollar Index (DXY), which tracks the U.S. currency against those of six trading partners, dropped 0.6 percent, set for the largest slump since Nov. 11. The greenback slipped 0.2 percent to 77.61 yen and weakened 1.5 percent to 98.51 cents against its Australian counterpart.
The euro rebounded from a four-week slump against the dollar and strengthened 0.3 percent to 103.18 yen. The IMF loan would give Italy’s Prime Minister Mario Monti 12 to 18 months to implement his reforms without having to refinance the country’s existing debt, La Stampa reported. Monti could draw on the money if his planned austerity measures fail to stop speculation on Italian debt, La Stampa said.
Italy would pay an interest rate of 4 percent to 5 percent on the loan, according to the newspaper. The amount could vary from 400 billion euros to 600 billion euros, La Stampa said.
ECB Policies
“It does appear that these sort of noises would give the European Central Bank the cover it needs to implement a policy where it is essentially able to be a lender of last resort,” said Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney.
German Finance Minister Wolfgang Schaeuble urged fast-track treaty changes to tighten budget discipline to calm markets. Treaty change is necessary to give veto power over member-state budgets to the European Union Commission, he said in an interview with ARD television in Berlin yesterday.
The kiwi rallied 1.3 percent to 74.99 U.S. cents. Key’s National Party won 48 percent of the vote on Nov. 26, up from 45 percent three years ago, allowing him to form the next government with support from political allies in parliament. His administration will focus on advancing the sale of state assets and returning the budget to surplus by 2014 to 2015 or earlier, the 50-year-old leader said in Auckland after the election.
Bond Risk, Commodities
The cost of insuring Asia-Pacific corporate and sovereign bonds from non-payment declined, with the Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan decreasing seven basis points to 231, Royal Bank of Scotland prices show. That will be its first decline since Nov. 18, and the biggest daily drop since Nov. 10, according to data provider CMA, which is owned by CME Group Inc.
Crude for January delivery rose as much as 1.8 percent to $98.54 a barrel on the New York Mercantile Exchange. Three-month copper rallied as much as 3.3 percent to $7,470 a metric ton on the London Metal Exchange. Spot gold gained 1.4 percent to $1,707.55 an ounce, while corn and soybean futures gained more than 1 percent each.
To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
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