Japan, Australia Stock Futures Rise as ECB Prepared to Cut Rates
Japanese and Australia stock futures rose after the European Central Bank said it ready to cut interest rates again, adding to optimism that central banks around the world will continue to buoy the economic recovery.
American Depositary Receipts of Nissan Motor Co., a Japanese carmaker that gets 79 percent of its revenue abroad, climbed 4.4 percent as the yen weakened. ADRs of BHP Billiton Ltd. (BHP), the world’s largest mining company, added 1.1 percent, leading gains on among companies with earnings closely tied to economic growth. Those of Toyota Motor Corp. rose 4.1 percent as the Nikkei newspaper reported the world’s biggest carmaker will report earnings tomorrow that exceed analyst estimates.
Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring in June traded at 14,195 in Chicago yesterday, up from 13,710 at the May 2 close in Osaka, Japan. They were bid in the pre-market at 14,080 in Osaka at 8:05 a.m. local time. Japanese markets reopen today after a two-day holiday. Futures on Australia’s S&P/ASX 200 Index advanced 0.3 percent before the Reserve Bank of Australia releases its interest=decision at 2:30 p.m. Sydney time.
“Investors like to be reassured from central banks that we are on the straight and narrow,” said James Lindsay, an Auckland-based fund manager at Tyndall Investment Management Ltd., which oversees about $23 billion. “Until economies really start to fire, I can’t see any pull-back of stimulus.”
New Zealand’s NZX 50 Index rose 0.3 percent. Futures on Hong Kong’s Hang Seng Index and on the Hang Seng China Enterprises Index of mainland companies trading in Hong Kong both added 0.2 percent.
The MSCI Asia Pacific Index, the benchmark regional equities gauge, climbed 8.5 percent this year through yesterday amid optimism the Bank of Japan will deploy more measures to beat deflation and that policy makers in the U.S., Europe and China remain on standby to buoy growth.
That left the gauge yesterday trading at 14.1 times average estimated earnings compared with 14.7 for the Standard & Poor’s 500 Index and 13.1 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
ECB President Mario Draghi said policy makers are ready to cut interest rates again if needed after reducing them to a record low last week.
“We will be looking at all the data that arrives from the euro-area economy in the coming weeks and if necessary, we are ready to act again,” Draghi said in a speech in Rome yesterday. “Monetary policy will remain accommodative.”
Australian central bank Governor Glenn Stevens enters today’s policy meeting facing the strongest pressure this year to cut the key interest rate to a record low as unemployment rises, swap markets indicate. The contracts show a 51 percent chance the Reserve Bank of Australia’s board will lower the overnight cash-rate target to 2.75 percent, below the 2.89 percent record reached in January 1960. Should Stevens stand pat, traders are pricing a 77 percent chance he will cut in June, data compiled by Bloomberg show.
Futures on the Standard & Poor’s 500 Index (SPX) fell 0.1 percent. The gauge gained 0.2 percent yesterday to a record, led by financial shares, after data last week showed American employers added more workers than forecast in April.
The Bloomberg China-US Equity Index of the most-traded Chinese shares in the U.S. climbed 0.8 percent in New York yesterday.
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