Asia Stocks Rise on Optimism Fed, ECB May Signal Stimulus
Asian stocks rose, with the regional benchmark index headed for its biggest four-day rally this year, on speculation policy makers from the U.S. to Europe and China will do more to stimulate economic growth.
Canon Inc. (7751), the world’s biggest camera maker, advanced 5.8 percent in Tokyo on a share buyback plan, pacing gains among technology shares. Hokuriku Electric Power Co. soared 14 percent, leading Japanese utilities higher after raising its sales forecast. Campbell Brothers Ltd., a provider of laboratory services for the mining industry, slumped 10 percent in Sydney after saying volatility and uncertainty in the global economy may have a negative earnings impact.
The MSCI Asia Pacific Index rose 1.1 percent to 118.66 as of 7:40 p.m. in Tokyo with more than two shares gaining for each that fell. The measure has added 5.1 percent in the last four days, the biggest such advance since Dec. 2, taking its monthly increase to 1.2 percent, a second straight gain.
“The markets are really focused on central bank actions rather than the economic environment,” said Matthew Sherwood, head of markets research for Sydney-based Perpetual Investments, which manages about $25 billion. “The problem in the global economy is the solvency of balance sheets of the government and banks around the world.”
The MSCI Asia Pacific Index fell 9 percent from this year’s high on Feb. 29 through yesterday amid concern Europe’s sovereign-debt crisis will worsen as the U.S. and Chinese economies slow. The regional benchmark index traded at 11.9 times estimated earnings, compared with 13.5 for the Standard & Poor’s 500 Index (SPXL1) and 11.2 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Japan’s Nikkei 225 Stock Average gained 0.7 percent after the nation’s jobless rate dropped in June. South Korea’s Kospi Index advanced 2.1 percent even after data showed industrial production dropped. Australia’s S&P/ASX 200 gained 0.6 percent, rising 4.3 percent in July, the biggest monthly advance since January. New Zealand’s NZX 50 Index increased 0.7 percent.
Hong Kong’s Hang Seng Index climbed 1.1 percent, while China’s Shanghai Composite Index slid 0.3 percent. Singapore’s Straits Times Index, the best-performing Asian developed-market gauge this month, climbed 0.1 percent.
Futures on the Standard & Poor’s 500 Index added 0.2 percent today. The gauge lost less than 0.1 percent in New York yesterday, snapping a two-day rally, ahead of an Aug. 3 report that may show the pace of hiring in July failed to reduce the U.S. jobless rate.
The Federal Open Market Committee will announce a policy decision tomorrow, and the European Central Bank will convene on Aug. 2. U.S. Treasury Secretary Timothy F. Geithner and German Finance Minister Wolfgang Schaeuble backed a commitment by European leaders to do everything needed to defend the euro area while failing to mention its weakest link, Greece.
“Investors may be buying on expectations the U.S. and Europe may ease monetary policy,” said Ayako Sera, a market strategist at Sumitomo Mitsui Trust Bank Ltd., which has 33 trillion yen ($422 billion) in assets. “Japanese stock prices are lagging those in the U.S. and Europe, so this may be driving the market.”
Canon paced gains among technology companies, which advanced the most of the 10 industry groups on MSCI Asia Pacific Index. The stock climbed 5.8 percent to 2,650 yen on plans to spend 50 billion yen ($639 million) to buy back as many as 21 million shares.
Of the 1,007 companies listed on the Asian benchmark gauge, 261 are scheduled to post earnings this week, according to data compiled by Bloomberg. Of the 243 companies that reported this month for which Bloomberg had earnings estimates, more than half failed to meet expectations. Earnings per share at companies on the index are expected to grow 20 percent this fiscal year.
Hokuriku Electric surged 14 percent to 799 yen, the biggest gain on the Asia-Pacific measure, after raising its fiscal-year sales forecast. The stock capped its biggest increase since 1988.
Campbell Brothers tumbled 10 percent to A$46.90, the biggest drop since 2009, as the company forecast first-half net income after tax of A$130 million to A$140 million ($137 million to $147 million), and saying it didn’t expect second-half growth will match the first half. The stock fell the most on the Asia- Pacific gauge.
Among other stocks that fell, China Rongsheng Heavy Industries Group Holdings Ltd. (1101) dropped 8.6 percent to HK$1.07 in Hong Kong after its rating was cut to “underweight” by Barclays Plc. The stock yesterday plunged to its lowest since 2010 after the U.S. Securities and Exchange Commission filed a complaint accusing a company owned by Chairman Zhang Zhi Rong of insider trading.
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