Asian stocks advanced, with the regional benchmark index set for its longest winning streak in six months, as exporters climbed after U.S. manufacturing unexpectedly grew and Europe prevented a default by Greece.
Samsung Electronics Co., an electronics maker that gets about 20 percent of sales from the U.S., increased 2.7 percent in Seoul. Toyota Motor Corp., the world’s biggest carmaker by market value, advanced 1.5 percent in Tokyo. Honda Motor Co., the automaker which receives 84 percent of its sales outside Japan, gained 3.5 percent. BHP Billiton Ltd., the world’s largest mining company and Australia’s No. 1 oil producer, climbed 0.6 percent after the price of oil increased.
“The increase in the manufacturing index shows U.S. consumption is favorable, and signals the economy will further recover through the end of this year,” said Takero Inaizumi, head of equity research in Tokyo at Mizuho Investors Securities Co. “The investment environment is changing as concerns ease about a U.S. economic slowdown and Greek debt.”
The MSCI Asia Pacific Index gained 1.3 percent to 137.29 as of 7:14 p.m. in Tokyo. The gauge briefly pared gains after Standard & Poor’s Rating Services said a Greek debt rollover plan may place the country in “selective default.” All 10 industry groups on the measure rose, driving the index to its highest level since May 11 and its longest streak of daily advances since Jan 4.
Japan’s Nikkei 225 Stock Average increased 1 percent. South Korea’s Kospi Index climbed 0.9 percent and Australia’s S&P/ASX 200 Index advanced 0.4 percent. Hong Kong’s Hang Seng Index rose 1.7 percent and China’s Shanghai Composite Index gained 1.9 percent.
The Bangkok SET Index jumped 4.7 percent, the most among the region’s benchmark gauges, after the Pheu Thai party, whose head is Yingluck Shinawatra, the sister of an exiled former Thai leader, won a parliamentary majority that may lessen the risk of a military intervention.
Futures on the Standard & Poor’s 500 Index fell 0.3 percent today. The benchmark index for stocks in the world’s largest economy last week recorded its biggest weekly advance since July 2009 as Greece lurched toward rescue and U.S. economic reports bolstered the case for recovery.
The S&P 500 index advanced 1.4 percent on July 1 after the Institute for Supply Management’s factory index rose to 55.3 last month from 53.5 in May, the first gain in four months. Economists surveyed by Bloomberg News estimated the index would drop to 52. Figures greater than 50 signal an expansion. U.S. markets are closed today for Independence Day.
Greece Debt Progress
Global stocks also rose on July 1 as Greece moved closer to averting a default. Greece may receive as much as 85 billion euros ($124 billion) in a second bailout aimed at preventing default, Thomas Wieser, an Austrian Finance Ministry official, said on June 30.
Increasing confidence about the Greek fiscal deficit resolution and the U.S. economy boosted the shares of Asian exporters, with the gauge for consumer discretionary stocks, which include electronics manufacturers and automakers, rising 1.4 percent, the second-most among the 10 industry groups on the broader MSCI Asia Pacific Index after utilities.
Samsung Electronics advanced 2.7 percent to 878,000 won in Seoul, the biggest support to the MSCI Asia Pacific Index. Toyota, which receives 27 percent of its sales from North America and 10 percent from Europe, gained 1.5 percent to 3,385 yen in Tokyo. Honda increased 3.5 percent to 3,220 yen.
The euro earlier gained to three-week highs versus the dollar and yen on speculation the European Central Bank will raise interest rates this week after the region pulled debt-stricken Greece from the brink of default. The currency then pared advances after S&P said if a French plan allowing bondholders to roll over their debt is implemented, it may place Greece temporarily in a “selective default.”
Europe’s common currency traded at 117.40 yen today in Tokyo, after rising to as high as 117.74 earlier. This compares to 117.14 at the close of stock trading on Tokyo on July 1. A stronger euro boosts the value of European income at Japanese companies when converted into their home currency.
“The European countries have put in so much effort the past two weeks in having a plan to help Greece, and this is just such a small technical issue,” said Alex Au, Hong Kong-based managing director of Richland Capital Management Ltd., which oversees $300 million of assets, of S&P’s comments. “Eventually they will do whatever they can to solve this.”
Energy stocks rose today as oil prices increased in New York, extending last week’s rally. BHP, which receives 17 percent of its revenue from petroleum, advanced 0.6 percent to A$44.02 in Sydney. Cnooc Ltd., a Chinese offshore oil refiner, gained 1.9 percent to HK$18.50 in Hong Kong. PetroChina Co. climbed 1.4 percent to HK$11.54
A measure for energy shares rose 1.6 percent on the MSCI Asia Pacific Index, as crude oil for August delivery rose as much as 0.4 percent to $95.30, adding to last week’s 4.2 percent increase. Prices are 32 percent higher through the past year.
Among other shares that gained, BYD Co., the Chinese automaker part-owned by Warren Buffett’s Berkshire Hathaway Inc. rose 10 percent to HK$27.70 after Berkshire Vice Chairman Charles Munger said the automaker has the ability to recover from missteps. BYD’s vehicle sales declined for 10 straight months through May and the company reported an 84 percent plunge in first-quarter profit.
China’s automobile-sales growth may recover in the second half of the year after a slowdown in the first six months, the official Xinhua News Agency reported, citing Dong Yang, deputy head of the China Association of Automobile Manufacturers.
BYD rivals Geely Automobile Holdings Ltd. and Dongfeng Motor Group Co. gained 7.9 percent and 6.9 percent respectively.
In Japan, Tokyo Electric Power Co., the utility at the center of the worst nuclear crisis in 25 years, jumped 20 percent to 393 yen after the country’s Chief Cabinet Secretary Yukio Edano said he didn’t know anything about a possible government proposal to split up the power company and nationalize nuclear power operations. The stock was the steepest increase on the MSCI Asia Pacific Index.
The MSCI Asia Pacific Index lost 1.6 percent this year through July 1, compared with a gain of 6.5 percent by the S&P 500 and a drop of 0.3 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13.7 times estimated earnings on average, compared with 13.5 times for the S&P 500 and 11.2 times for the Stoxx 600.