The yen weakened to a 20-month low against the euro as traders prepared for more monetary stimulus from the Bank of Japan. (8301) Chinese stocks rose the most in a month as regulators said foreign-investment quotas can increase 10- fold. Corn and oil led commodities higher.
The yen touched 120.13 against the euro before trading at 119.44 as of 8:15 a.m. in London. China’s Shanghai Composite Index jumped 3.1 percent, boosting the MSCI Asia Pacific excluding Japan Index. (MXAPJ) The Stoxx Europe 600 Index increased 0.2 percent and futures on the Standard & Poor’s 500 Index added 0.1 percent. Corn climbed 1.9 percent as U.S. stockpiles shrank more than forecast and oil rose 0.6 percent. Japan’s financial markets are shut today.
Bank of Japan Governor Masaaki Shirakawa will address a meeting of branch managers tomorrow after Prime Minister Shinzo Abe said he is seeking a “bold policy leader” as the next central bank chief. China can expand quotas for foreign investment in the country’s financial markets by 10 times, said China Securities Regulatory Commission Chairman Guo Shuqing. Federal Reserve Chairman Ben S. Bernanke speaks today before data this week that may show the recovery remains fragile.
“It’s a step in the right direction as greater foreign participation is always good for the market,” said Ng Soo Nam, chief investment officer at Nikko Asset Management, which oversees about $165 billion. “This market rebound is very well founded on solid ground given that the China story has been quite positive and earnings have been resilient. The weakness of the yen is another positive factor. The impact will be positive for Japan’s export sector.”
The yen fell 0.3 percent against the dollar, trading at the weakest since June 2010. The Japanese currency last week capped a ninth weekly loss against the greenback, the longest stretch since 10 weeks ended in February 1989, after Abe announced a 10.3 trillion ($115 billion) yen spending package to drive a recovery. The Bank of Japan meets Jan. 21-22.
“Abe announced fiscal stimulus in Japan, which is what sent the yen lower against the dollar,” Richard Franulovich, a senior currency strategist at Westpac Banking Corp. (WBC) in New York, said in a telephone interview. “We were expecting some sort of fiscal program, and they basically put some flesh on the bone.”
The dollar touched a more than 10-month low of $1.3404 per euro as Federal Reserve Bank of Chicago President Charles Evans said the central bank should keep policy accommodative to support the economy. Interest rates are expected to stay low until 2015, Evans said in Hong Kong today. Bernanke’s speech today comes before reports this week that may show growth in retail sales slowed and manufacturing in the New York region failed to expand.
Commodities as measured by the S&P GSCI Index climbed 0.5 percent. Oil increased to $94.17 a barrel, silver climbed 0.9 percent to $30.74 an ounce and copper on the London Metal Exchange rose 0.6 percent to $8,091 a metric ton.
Corn advanced for a sixth day, the longest rally since February, after the U.S. government said stockpiles in the world’s largest grower and exporter shrank more than analysts expected because of drought and rising demand. Futures traded in Chicago climbed to $7.225 a bushel, near the highest level since Dec. 1. Wheat increased 1.9 percent to $7.6875 a bushel and soybeans gained 1.5 percent to $13.9375 a bushel.
China’s Shanghai Composite Index (SHCOMP) capped the biggest advance since Dec. 14 after CSRC’s Guo said in Hong Kong today that China can raise 10 times the amount that foreigners can invest in Chinese securities under the so-called QFII and RQFII programs.
The CSI 300 Index rallied 3.8 percent before reports on gross domestic product, retail sales and industrial output due on Jan. 18 that may show the economy is recovering. China’s stocks are set to rise 20 percent this year, bolstered by the government’s efforts to boost domestic spending and accelerate urban development, according to UBS AG’s chairman and country head for China, David Li.
Goldman Sachs Group Inc., JPMorgan Chase & Co., online auction site EBay Inc. (EBAY) and General Electric Co. are among the companies on the S&P 500 that are scheduled to report earnings this week. The U.S. equity benchmark last week climbed to the highest level in five years, capping a second weekly advance.
Of the 27 S&P 500 companies that have posted quarterly earnings, 81 percent exceeded analysts’ estimates and 67 percent reported a profit increase, according to data compiled by Bloomberg. Fourth-quarter earnings at S&P 500 companies grew 2.5 percent, according to analysts’ estimates. That would be the second-slowest quarterly growth since 2009, the data show.
Asian stocks outside Japan advanced, with about five shares rising for every three that dropped on the regional gauge. CapitaLand Ltd., Southeast Asia’s biggest developer, City Developments Ltd. and Keppel Land Ltd. declined more than 4 percent in Singapore after the government announced additional cooling measures.
The BSE India Sensitive Index (SENSEX) rose to a two-year high after government data showed inflation slowed to the lowest level in almost a year in December, boosting speculation the central bank will cut interest rates to revive the economy.
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