Japan Stock Futures Rise on Signs U.S. Lawmakers Close to Debt Agreement

Japanese stock futures gained amid optimism U.S. lawmakers will reach an agreement on raising the federal debt ceiling one day before the Treasury Department says it will run out of cash to pay its bills.

American depositary receipts of Toyota Motor Corp., the world’s largest carmaker that counts North America as its biggest market, increased 0.3 percent from the closing share price in Tokyo. Those of Kyocera Corp., a maker of solar panels that gets 17 percent of its revenue in the U.S., gained 0.3 percent. ADRs of NTT DoCoMo Inc., Japan’s No. 1 mobile-phone operator by market value, advanced 1.2 percent after the company said first-quarter profit increased.

Futures on Japan’s Nikkei 225 (NKY) Stock Average expiring in September were bid in the pre-market at 9,890 in Osaka at 8:05 a.m. local time compared with their July 29 closing level of 9,820 in Chicago and 9,830 in Osaka. Futures on Australia’s S&P/ASX 200 Index slid 0.1 percent today. New Zealand’s NZX 50 Index gained 0.1 percent in Wellington.

“The U.S. debt ceiling talks are moving toward an agreement and the dollar’s depreciation is easing,” said Kazuhiro Takahashi, a general manager at Daiwa Securities Capital Markets Co. in Tokyo. “More and more companies are reporting earnings that exceed analysts’ estimates or raising profit forecasts, and that’s bringing a feeling of hope.”

Futures on the Standard & Poor’s 500 Index jumped 1.2 percent today amid optimism lawmakers and President Barack Obama are close to an agreement to raise the federal debt ceiling and avoid a default.

Tentative Agreement

Senate Majority Leader Harry Reid approved a tentative agreement with Republican leaders and the Obama administration to raise the borrowing limit pending approval by fellow Senate Democrats, according to a spokesman.

Congressional leaders and the Obama administration negotiated to finish the details of the agreement, paving the way for possible votes in the Senate and House. Senate Republican leader Mitch McConnell said that congressional negotiators and Obama are “very close” to a deal, having made “dramatic progress” on July 30.

The dollar climbed versus the euro, yen and Swiss franc after Reid’s office said he signed off on a proposed deal, pending approval of fellow Senate Democrats. The Dollar Index, which tracks the currency against six counterparts, fell in July as debt talks and concern over slow growth damped demand for the greenback.

U.S. Growth

In New York, the S&P 500 fell 0.7 percent to 1,292.28 on July 29 as economic growth trailed forecasts and investors awaited the outcome of negotiations to avoid a debt default.

The Commerce Department reported gross domestic product rose at a 1.3 percent annual rate in the second quarter following a 0.4 percent gain in the previous three months that was less than originally estimated. The median forecast of economists surveyed by Bloomberg News called for a 1.8 percent increase. Household purchases, which make up about 70 percent of the economy, climbed 0.1 percent.

In a separate report, the Institute for Supply Management- Chicago Inc. said on July 29 its business barometer fell to 58.8 in July, lower than forecast, from 61.1 the prior month. Figures greater than 50 signal expansion.

In Europe, Moody’s Investors Service said on July 29 that it is reviewing Spain’s Aa2 classification as its regions struggle to cut budget deficits and last week’s Greek bailout increases the risk that bondholders will have to pay for further European rescues. A cut would probably be “limited to one notch,” Moody’s said. Spain has the same credit rating as Italy, which is also on review for downgrade at Moody’s.

Yearly Loss

The MSCI Asia Pacific Index lost 0.7 percent this year through July 29, compared with a gain of 2.8 percent by the S&P 500 and a drop of 3.8 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13.4 times estimated earnings on average, compared with 12.9 times for the S&P 500 and 10.8 times for the Stoxx 600.

In Japan, of the 620 companies that have released quarterly earnings results since July 11, 98 have reported profit surprises, exceeding 59 firms that reported disappointing results, according to data compiled by Bloomberg.

NTT DoCoMo said on July 29 that net income increased 12 percent to 158 billion yen ($2 billion) for the April-June period, citing cost reductions.

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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