Japanese Stock Futures Rise on U.S. Deficit Plan, Earnings

Japanese and Australian stock futures rose on optimism U.S. lawmakers will reach an agreement that will help the world’s largest economy avoid defaulting on its sovereign debt and after Apple Inc. (AAPL)’s profit topped estimates, boosting the earnings outlook for exporters.

American depositary receipts of Toyota Motor Corp. (7203), the world’s largest carmaker that gets 28 percent of revenue in North America, gained 0.9 percent from the closing share price in Tokyo. Those of Hitachi Ltd. (6501), Japan’s third-biggest company by sales, rose 1 percent. ADRs of BHP Billiton Ltd. (BHP), the world’s largest mining company and Australia’s No. 1 oil producer, advanced 0.6 percent after commodity prices increased.

Futures on Japan’s Nikkei 225 (NKY) Stock Average expiring in September closed at 9,995 in Chicago yesterday, compared with 9,890 in Osaka, Japan. They were bid in the pre-market at 10,000 in Osaka at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index climbed 1.1 percent today. New Zealand’s NZX 50 Index gained 0.6 percent in Wellington.

“People are feeling less anxious about a default and the economy in the U.S.,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc. “Strong earnings in the U.S. are good for Japanese companies’ profit outlook.”

Futures on the Standard & Poor’s 500 Index gained 0.1 percent today as Apple’s profit topped estimates on record iPhone and iPad sales. The index rose 1.6 percent to 1,326.73 yesterday as President Barack Obama endorsed a deficit-reduction plan.

Debt Plan

Obama embraced a $3.7 trillion debt-cutting plan by a bipartisan group of senators that would combine tax increases and spending cuts, saying it could end a congressional deadlock over raising the U.S. borrowing limit. The news spurred optimism that lawmakers will reach an agreement that will help the nation avoid default.

The plan is “a very significant step,” Obama said.

California-based Apple, the world’s biggest technology company by market value, reported profit in the third-quarter increased to $7.79 a share from a year earlier, exceeding the $5.87 predicted by analysts on average. Sales climbed 82 percent to $28.6 billion.

Housing starts in the U.S. rose more than forecast in June to the highest level in five months. Work began on 629,000 houses, a 15 percent increase from May, the Commerce Department reported yesterday. The level of starts exceeded the most optimistic forecast in a Bloomberg News survey of economists. Building permits, a sign of future construction, unexpectedly climbed 2.5 percent.

Oil Rises

The MSCI Asia Pacific Index lost 1.8 percent this year through yesterday, compared with a gain of 5.5 percent by the S&P 500 and a drop of 4.2 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13.4 times estimated earnings on average, compared with 13.4 times for the S&P 500 and 10.6 times for the Stoxx 600.

Crude oil for August delivery climbed 1.6 percent to $97.50 a barrel in New York yesterday, the highest settlement since July 13, amid growing optimism that the economy of the world’s biggest oil-consuming country will grow after the better-than- expected housing starts and earnings reports.

The London Metal Exchange Index of prices for six industrial metals including copper and aluminum advanced 1.7 percent yesterday.

The yen depreciated to 79.28 against the dollar, compared with 79.03 at the close of stock trading in Tokyo yesterday. Against the euro, Japan’s currency weakened to 112.17 from 111.26. A weaker yen boosts the value of overseas income at Japanese companies when converted into their home currency.

To contact the reporters on this story: Akiko Ikeda in Tokyo at iakiko@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.

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