Asian Futures Tip Gains as U.S. Jumps on Fed; Gas Rallies

Asian equity futures rose, indicating shares from Japan to Australia may follow U.S. stocks higher, on prospects the Federal Reserve will signal the fate of monetary stimulus after its meeting today. The yen held declines, while natural gas and gasoline gained.

Futures on the Nikkei 225 Stock Average due in September added 1.9 percent to 13,240 by 3 a.m. in Osaka, after closing at 13,235 in Chicago and 13,000 yesterday in Japan. Contracts on Australia’s S&P/ASX 200 Index increased 0.7 percent, while Hang Seng Index futures rose 0.1 percent. Standard & Poor’s 500 Index futures gained 0.1 percent, after the measure climbed 0.8 percent in New York, rising for a second day. Japan’s currency weakened 0.1 percent versus the dollar after dropping the past two days. Crude oil extended gains from a nine-month high.

Fed Chairman Ben S. Bernanke, who has helped shave more than $2 trillion from global markets since May 22 after signaling that the central bank’s asset buying program could be scaled back, will speak to reporters after the conclusion of Fed’s two-day policy meeting today. Data in the U.S. yesterday showed housing starts rose and the cost of living increased less than forecast in May. Oil rallied as the conflict in Syria boosted concern Middle Eastern supplies will be disrupted.

“The Fed will likely tread a careful path between further preparing the market for tapering of asset purchases while emphasizing that actual policy tightening remains a long way off,” Kymberly Martin, a markets strategist in Wellington at Bank of New Zealand Ltd., said in an e-mail. “There’s certainly potential for significant volatility in markets around the announcement.”

QE Gains

The Fed’s easing program has contributed to a 16 percent advance in the S&P 500 this year, and the gauge has risen 144 percent from its bear-market low reached in 2009 amid four straight years of earnings growth. Japan’s Topix Index has risen 26 percent in 2013 while the MSCI Asia-Pacific Index of regional equities is up 1.8 percent.

Commerce Department data showed builders broke ground on 914,000 U.S. homes at an annualized rate, up 6.8 percent while below the the median estimate of 950,000 from 82 economists surveyed by Bloomberg. Another report showed the consumer price index increased 0.1 percent in May, half the median projection, after falling 0.4 percent in April.

‘Waiting to Hear’

“Everybody’s just waiting to hear what the Fed has to say,” Tom Wirth, who helps manage $1.6 billion as senior investment officer for Chemung Canal Trust Co. in Elmira, New York, said by phone yesterday. “If they say they’ll taper sooner rather than later, there’ll be fear in the market and we’ll see a decline for some time in stocks. We’ll need to see the results of tapering. If the economy continues to roll along and grow without as much Fed buying, that will spur us to the next leg up in the bull market.”

The yen slipped to 95.45 per dollar and lost 0.1 percent to 127.82 per euro by 7:25 a.m. in Tokyo. Australia’s dollar was little changed at 94.80 U.S. cents, while the New Zealand currency was steady at 79.88 cents. The Dollar Index fell 0.2 percent yesterday. Yields on 10-year Treasury notes were little changed at 2.18 percent after climbing five basis points the previous day.

U.S. President Barack Obama said that Fed Chairman Bernanke has stayed in his post “longer than he wanted,” one of the clearest signals the central bank chief will leave when his current term expires next year.

“Ben Bernanke’s done an outstanding job,” Obama said in an interview with Charlie Rose, when asked about nominating him for another term subject to Senate approval. “He’s already stayed a lot longer than he wanted or he was supposed to.”

Holdings Cut

Investors cut bond holdings to a near two-year low this month and bought stocks as expectations the Fed may remove monetary stimulus bolstered growth forecasts, a Bank of America Corp. survey showed.

A net 50 percent of 190 global fund managers, who together oversee about $572 billion, said they now hold fewer bonds than are represented in asset-allocation benchmarks, while the proportion who are overweight on stocks rose to 48 percent from 41 percent as they bought U.S. and European shares. Emerging-market equity holdings slumped to the lowest level since December 2008.

“Investors’ sentiment has been surprisingly resilient in recent weeks despite the jump in volatility in financial markets,” Michael Hartnett, New York-based chief investment strategist at Bank of America’s Merrill Lynch unit, wrote in a note to investors yesterday. “While our fund-flows data shows bond capitulation, the survey shows that there has been no capitulation in equities in the U.S. and Europe.”

Natural gas futures gained 0.2 percent, rising for a third day, on prospects hotter weather later this month may spur demand from power plants. West Texas Intermediate crude rose 0.1 percent after jumping 0.7 percent to $98.44 a barrel yesterday, the highest settlement since Sept. 14. Gasoline futures maturing next month added 0.3 percent.