Japan Stock Futures Gain on U.S. Home Data, Budget Deal Optimism

Japanese stock futures and Australian equities rose as better-than-forecast U.S. home sales boosted optimism in the world’s largest economy amid speculation President Barack Obama can strike a deal to avoid automatic spending cuts and tax increases.

American Depositary Receipts of Komatsu Ltd. (6301), the world’s second-biggest maker of construction and mining equipment that gets 80 percent of sales outside Japan, climbed 1.2 percent. ADRs of Canon Inc. rose 0.7 percent as the Japanese camera maker said it will increase its dividend. BHP Billiton Ltd. (BHP), the world’s largest mining company, gained 1.5 percent in Sydney as metals prices advanced.

Futures on Japan’s Nikkei 225 Stock Average expiring next month closed at 9,220 in Chicago yesterday, up from 9,130 in Osaka, Japan. They were bid in the pre-market at 9,200 in Osaka at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index gained 0.5 percent and New Zealand’s NZX 50 Index rose 0.9 percent in Wellington.

“Confidence is growing that a U.S. budget deal can be reached, as politicians from both parties continue to make some positive comments on working together to come up with a solution,” said Stan Shamu, a market strategist at IG Index, a Melbourne-based provider of trading services for equities, currencies and commodities. “Better-than-expected existing home sales data has also helped to lift sentiment.”

Futures on the Standard & Poor’s 500 Index fell 0.1 percent today. The S&P 500 rose the most in two months yesterday as Obama expressed confidence on a budget agreement with Congress and sales of previously owned U.S. homes climbed in October.

Budget Talks

Obama met with senior Democrats and Republicans on Nov. 16 for talks to avoid $607 billion of automatic tax increases and spending cuts that, if allowed to come into force, might push the country into a recession next year. House Speaker John Boehner, a Republican, last week described the budget discussions as constructive and said he would accept increased government revenue coupled with spending cuts. Congress is now in recess for Thanksgiving until Nov. 26.

The MSCI Asia Pacific (MXAP) Index gained 11 percent from this year’s low on June 4 through yesterday as central banks added stimulus to spur economic growth and data showed a slowdown in China may be ending. The Asian benchmark index traded at 13.4 times estimated earnings, compared with 13.4 times for the S&P 500 Index and a multiple of 12.1 for the Stoxx Europe 600.

Japan’s Nikkei 225 Stock Average increased 1.4 percent yesterday, capping its biggest advance in a four-day period since March 2011, amid speculation the country’s opposition party that advocates more aggressive monetary policy easing will take power at elections in December.

France Rating

France today lost its top credit rating with Moody’s Investors Service, dealing a blow to President Francois Hollande’s efforts to show budget credibility as Europe’s second-largest economy stalls.

Of the 565 companies on the MSCI Asia Pacific Index that reported quarterly results since Oct. 1, and for which estimates are available, 55 percent missed expectations, according to data compiled by Bloomberg News.

The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S. gained 2.2 percent yesterday, the biggest gain in almost two months.

The Thomson Reuters/Jefferies CRB Index of raw materials climbed 1.6 percent yesterday.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

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

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