Asia Shares May Be Volatile on North Korea Rocket Launch

Asian share trading may be volatile today after North Korea fired a rocket in defiance of international pressure. Japanese and Australian stock futures rose ahead of the report of the rocket launch after Federal Reserve policy makers signaled interest rates will remain low.

South Korea’s government “will closely watch financial markets and other developments,” Kim Yi Tae, director of the international finance bureau at the Ministry of Strategy and Finance in Seoul, said by telephone today.

American depositary receipts of Toyota Corp., Asia’s biggest carmaker that counts North America as its No. 1 market, rose 0.8 percent from the closing share price in Tokyo. Those of Komatsu Ltd. (6301), Japan’s largest construction machinery maker that gets 23 percent of its sales in China, added 1.7 percent ahead of a report due today on China’s economic growth. ADRs of Woodside Petroleum Ltd. (WPL), Australia’s second-biggest oil and gas producer, climbed 0.9 percent as crude prices advanced.

Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring in June closed at 9,600 in Chicago yesterday, up from 9,540 in Osaka, Japan. They were bid in the pre-market at 9,600 in Osaka at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index added 0.6 percent today. New Zealand’s NZX 50 Index rose 0.6 percent in Wellington.

“There’s no concern for early tightening in the U.S.,” said Takashi Hiroki, chief strategist at Monex Securities in Tokyo. “Stronger GDP data out of China would buoy optimism for an economic recovery, while a weaker number would boost bets for monetary easing.”

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Futures on the Standard & Poor’s 500 Index (SPXL1) lost 0.1 percent today as South Korea’s Defense Ministry said North Korea launched a rocket in defiance of international pressure about 7.39 a.m. Seoul time.

The index rose 1.4 percent in New York yesterday, capping the biggest two-day rally this year, after Federal Reserve Vice Chairman Janet Yellen and New York Fed President William C. Dudley endorsed the central bank’s view that borrowing costs are likely to remain low through 2014. Those comments overshadowed an increase in claims for jobless benefits last week.

Chinese equities listed in the U.S. gained on signs looser monetary policy is bolstering lending ahead of a report today that is forecast to show growth is slowing in the world’s second-biggest economy.

The Bloomberg China-US Equity Index of the most-traded Chinese shares in the U.S. climbed 2.5 percent to 103.76 yesterday in New York, the steepest gain since Jan. 10. Chinese lenders added 1.01 trillion yuan ($160.1 billion) of new loans in March, the most since January 2011, the central bank reported yesterday.

China GDP

A report due at 10 a.m. in Beijing today is forecast to show China’s economy expanded 8.4 percent in the first quarter after growing 9.2 percent in the previous three months, according to the median estimate of economist surveyed by Bloomberg.

The People’s Bank of China has lowered the amount major banks must set aside as reserves twice since November to spur lending as a global economic slowdown looms. Policy makers also doubled the amount foreigners are allowed to invest in China’s capital markets on April 4 to lure more investment.

Crude for May delivery rose 94 cents to settle at $103.64 a barrel on the New York Mercantile Exchange.

The MSCI Asia Pacific Index (MXAP) rose 8.9 percent this year through yesterday, compared with a 10.3 percent gain by the S&P 500 and a 5.2 percent advance by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.7 times estimated earnings on average, compared with 13.3 times for the S&P 500 and 10.7 times for the Stoxx 600.

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@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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