U.S. Futures Rebound as Yen Weakens

By Shiyin Chen - Nov 22, 2011 1:02 PM GMT+0700

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Nov. 22 (Bloomberg) -- Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., talks about the outlook for global stock markets. Oliver also discusses the failure of a special debt-reduction committee in the U.S. Congress to reach an agreement, the nation's economy, and Europe's sovereign debt crisis. He speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)

U.S. equity futures rose, signaling the Standard & Poor’s 500 Index may rebound from a six-week low, and the yen weakened after ratings companies affirmed the U.S. government’s credit grades. Asian stocks declined a sixth day, while India’s rupee weakened to a record.

S&P 500 futures added 0.5 percent as of 3 p.m. in Tokyo, after the U.S. stocks gauge sank 1.9 percent yesterday. The MSCI Asia Pacific Index lost 0.1 percent. The yen slipped against 15 of its 16 major peers, South Korea’s won fell 0.4 percent and the Indian rupee weakened past 52.18 a dollar, a level last seen in 2009. Copper rallied for the first time in four days. Gold rebounded from the largest drop in two months.

About $3.3 trillion has been wiped out from global equity market values this month. Standard & Poor’s and Moody’s Investors Service kept the U.S.’s credit rating unchanged after Congress’s special debt-reduction committee failed to reach an agreement, setting the stage for $1.2 trillion in automatic spending cuts. Data today may show euro-area consumer confidence fell to a two-year low, while the World Bank said developing East Asia will grow at a slower pace next year.

“When you look at valuation measures for global equities, they’re all running well below historical averages,” Shane Oliver, the Sydney-based head of investment strategy at AMP Capital Investors Ltd., said in a Bloomberg Television interview. “Very tough economic conditions are already priced in, probably something approaching a global recession.”

S&P 500 futures expiring in December earlier fell 0.3 percent before gaining as much as 0.5 percent. Hewlett-Packard Co. (HPQ) retreated in extended trading after the company forecast first-quarter profit that missed analysts’ estimates.

U.S. Credit Ratings

Treasury 10-year yields climbed two basis points to 1.97 percent, after a drop of six basis points yesterday. S&P, which stripped the U.S. of its top AAA grade on Aug. 5, said yesterday the supercommittee’s inability to reach agreement didn’t merit another downgrade because the inaction will trigger $1.2 trillion in automatic spending cuts.

The deliberations were “not decisive,” Moody’s spokesman Eduardo Barker said in an e-mail after the panel issued a statement.

“The rating companies’ decisions eased excessive risk- averse sentiment, spurring selling of haven currencies such as the dollar and yen,” said Daisaku Ueno, Tokyo-based president of Gaitame.com Research Institute Ltd., a unit of Japan’s largest online currency broker. “People are unwinding their positions before holidays in Japan and the U.S.” tomorrow and on Nov. 24 respectively.

The yen weakened 0.3 percent to 103.97 per euro and traded 0.2 percent lower at 77.05 versus the dollar.

Euro, Rupee

The euro held yesterday’s losses to trade at $1.3493 before a report today forecast to show that consumer confidence in the 17-nation region fell this month to a two-year low. Spain is scheduled to sell bills after 10-year yields climbed 17 basis points to 6.55 percent yesterday.

The won decreased as much as 0.9 percent to 1,150.85 per dollar, a one-month low. India’s rupee fell past levels last seen on March 3, 2009, as international investors reduced holdings of local equities. Sri Lanka’s central bank said yesterday it will weaken its rupee by 3 percent from today.

Developing East Asia, which excludes Japan, Hong Kong, Taiwan, South Korea, Singapore and India, will see its expansion moderate to 7.8 percent in 2012 from 8.2 percent this year, the Washington-based development lender said in a semiannual report today. While China faces the risk of a “strong” impact from a real-estate correction, its gross domestic product will rise 8.4 percent next year and about that pace thereafter, the bank said.

HTC, Olympus

MSCI’s Asia-Pacific Index, which dropped 5.4 percent in the previous five days, is valued at 12.3 times estimated earnings, lower than its five-year average multiple of 16.4 times, according to data compiled by Bloomberg. Hong Kong’s Hang Seng Index sank 0.4 percent, Japan’s Nikkei 225 Stock Average dipped 0.4 percent and Taiwan’s Taiex index lost 0.6 percent.

HTC Corp. (2498) slumped 5.8 percent in Taipei after the company’s S3 Graphics unit lost a patent case against Apple Inc. at the U.S. Trade Commission. Olympus Corp. rallied 20 percent after an independent committee investigating inflated payments to advisers for acquisitions by the company said it has found no links to organized crime so far in its probe.

Fosun International Ltd. (656), the biggest investor in Focus Media Holding Ltd., fell 5.6 percent in Hong Kong trading. Focus Media plunged 39 percent yesterday after Muddy Waters LLC, the short-selling firm, recommended betting against the Shanghai- based digital advertising company.

Bond Risk

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan climbed 5.5 basis points to 222.5 basis points, and the Markit iTraxx Australia index widened five basis points to 207, Credit Agricole SA prices show. Both indexes are headed for the highest close since Oct. 10, according to data provider CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.

Copper for three-month delivery rose 1.5 percent to $7,417 a metric ton on the London Metal Exchange, following a three-day, 5.4 percent slump. Zinc futures added 0.9 percent and aluminum gained 1.1 percent. Immediate-delivery gold rose as much as 0.7 percent to $1,688.25 an ounce after falling 2.7 percent yesterday, the most in two months. Oil traded near the lowest in more than a week in New York.

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