Japan stock futures and Australian shares rose, signaling the Asian benchmark index may rebound after concern that Europe will plunge back into crisis wiped $190 billion off the value of regional equities yesterday.
American Depositary Receipts of Mitsubishi UFJ Financial Group Inc. (8306) climbed 1.8 percent after Japan’s largest publicly traded lender yesterday fell by the most in eight months. ADRs of Canon Inc. (7751), a camera maker that gets 80 percent of sales outside Japan, gained 1.1 percent. Alacer Gold Corp. advanced 3.9 percent in Sydney as gold rose for a fourth day.
Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring in June closed at 12,325 in Chicago yesterday, up from 12,170 at the close in Osaka, Japan. They were bid in the pre-market at 12,340 in Osaka at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index advanced 0.5 percent, recouping some of yesterday’s 2.1 percent drop after Cyprus proposed an unprecedented levy on bank savings to pay for a European bailout. New Zealand’s NZX 50 Index slipped 0.1 percent today.
“Investors are not overly concerned about the potential for political contagion from the imposition of a deposit tax in Cyprus,” said Ric Spooner, chief market analyst at CMC Markets in Sydney. “Investors and bank depositors appear to accept assurances that this is a one-off measure that would not be imposed on citizens of larger debtor nations elsewhere in Europe.”
The MSCI Asia Pacific Index, the benchmark regional equities gauge, yesterday posted the biggest drop in eight months amid concern Cyprus will reignite the European debt crisis and that China will step up property curbs to temper rising prices. Every benchmark gauge in the Asia-Pacific dropped, with the regional measure losing about $190 billion in market value, equivalent to almost eight times Cyprus’ annual gross domestic product.
Asian stocks rallied 3.7 percent this year through yesterday as improving economic data from the U.S. and speculation that Japan will unleash more stimulus countered China’s efforts to rein in property prices.
Earnings-per-share on the MSCI Asia Pacific Index will grow 10 percent in the next 12 months and expand a further 15 percent in the following year, according to data compiled by Bloomberg. The gauge traded at 14.6 times average estimated earnings compared with 14 for the Standard & Poor’s 500 Index (SPX) and a multiple of 12.8 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
“While the market may well be subjected to bouts of concern again, we see the year being a positive one for equities,” said Wellian Wiranto, an investment strategist at the wealth management unit of Barclays Plc in Singapore, which manages $248 billion. “In some ways, the degree in which the market has been performing year-to-date is especially encouraging, given the world was served with quite a number of event risks.”
Futures on the Standard & Poor’s 500 Index were little changed. The Dow Jones Industrial Average dropped 0.4 percent yesterday, after reaching a record last week, following declines European and Asian in equity markets.
The U.S. Federal Open Market Committee is scheduled to begin a two-day meeting today. The committee in December agreed to link its zero-interest-rate policy to thresholds for unemployment and inflation so investors and households know what conditions will prompt the central bank to consider raising borrowing costs.
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