Asia Stock Futures Signal Rebound on U.S. Economic Data

Stock futures in Japan, Hong Kong and Australia rose, indicating equity gauges in Asia will rebound from a rout yesterday that erased the regional benchmark’s gains for the year, on positive U.S. economic data and bets the Federal Reserve will maintain record-low rates.

American Depositary Receipts of Toyota Motor Corp. gained 3.6 percent from the close in Tokyo as the yen fell against the dollar, boosting the earnings outlook at the world’s largest carmaker. ADRs of Cathay Pacific Airways Ltd., Asia’s biggest international carrier, added 1.2 percent from the close in Hong Kong. Those of BHP Billiton Ltd., the No. 1 global miner, climbed 2.7 percent.

Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring in September closed at 12,925 in Chicago yesterday, up from 12,400 at the close in Osaka. They were bid in the pre-market at 12,970 in Osaka at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index advanced 1.2 percent, and New Zealand’s NZX 50 Index rose 0.4 percent. Futures on Hong Kong’s Hang Seng Index gained 1.1 percent.

“There are reasons to be optimistic that further weakness will be temporary and that the peak is not behind us,” Alex Treves, head of equities Japan for Fidelity Worldwide, which has about $248 billion under management, said in e-mailed comments. “The key drivers of the rally remain intact, valuations are still reasonable and earnings are projected to recover to 2007 highs.”

Futures contracts on the Hang Seng China Enterprises Index of mainland Chinese companies trading in Hong Kong added 1.8 percent. The Bloomberg China-US Equity Index of the most-traded Chinese shares in the U.S. climbed 0.8 percent in New York yesterday.

U.S. Economy

Retail sales in the U.S. rose 0.6 percent last month, the biggest increase in three months, Commerce Department figures showed yesterday. The median forecast of 83 economists surveyed by Bloomberg called for a 0.4 percent advance. Data from a separate report indicated fewer Americans than forecast filed applications for unemployment benefits last week.

Asia’s biggest equity sell-off in three weeks yesterday sent gauges in Tokyo and Hong Kong into bear markets, while the regional and Australian benchmark entered corrections. The decline cut the seven-month advance on the Topix index to 45 percent, compared with 77 percent at the market’s recent peak on May 22. The MSCI Asia Pacific Index has climbed 7.7 percent over that period through yesterday, beginning when elections were announced that stoked optimism Japanese Prime Minister Shinzo Abe’s policies could weaken the yen and beat deflation.

Bullish Stance

“Assuming that Abenomics has not been defeated, we see no reason to become bearish on Japanese stocks, and recommend a bullish stance,” analysts led by Hiromichi Tamura at Nomura Holdings Inc. wrote in a report yesterday. The brokerage increased its year-end estimate for the Topix index to 1,500 from 1,350, while boosting the outlook for earnings per share to 82.5 from 75.

Concern central banks around the world may refrain from adding stimulus erased $2.7 trillion of stock value globally since May 21. Declines yesterday came after the World Bank cut its global growth forecast as emerging-market economies led by China slow.

The Asia-Pacific measure has erased more than $800 billion since May 20 and traded through yesterday at 12.5 times average estimated earnings compared with 14.8 for the Standard & Poor’s 500 Index (SPX) and 12.8 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Futures on the Standard & Poor’s 500 Index rose 0.2 percent, indicating the gauge will extend yesterday’s biggest gain since January. The measure advanced 1.5 percent. Stocks and Treasuries extended gains as the Wall Street Journal reported that the Fed may “push back” on market expectations for higher borrowing costs. Global stocks have plunged more than 3 percent from this year’s May 21 peak on speculation the Fed may scale back record stimulus as the U.S. economy strengthens.

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

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.