Asia Futures Heed U.S. Stock Jump on Economy as Oil Falls

Asian equity futures from Japan to Australia rose, tracking a rebound in U.S. stocks after better-than-estimated data bolstered the outlook for the world’s largest economy and concern over China’s cash crunch eased. Crude fell the first day this week.

Futures due in September on Japan’s Nikkei 225 Stock Average closed up 1.2 percent in Chicago and added 1.6 percent by 3 a.m. in Osaka, while contracts on Hong Kong’s Hang Seng Index gained 1 percent. S&P/ASX 200 Index futures climbed 0.6 percent in Sydney. Standard & Poor’s 500 Index futures were little changed by 7:36 a.m. in Tokyo, after the gauge rose 1 percent in New York, cutting June 24’s 1.2 percent slump. The dollar gained against other major currencies including the yen. Copper futures retreated.

Almost a week after the Federal Reserve said an improving economy could spur reductions in stimulus, data in the U.S. showed durable goods bookings climbed in May and house prices, new-home sales and consumer confidence reports beat economists’ estimates. Chinese stock volatility is the highest since 2011, while the People’s Bank of China said in a statement late yesterday it will use tools to ensure money-market stability and that the shortage of cash on the market will abate.

“A swathe of upbeat U.S. data breathed fresh life into the trend for a stronger dollar,” Mike Jones, currency strategist at Bank of New Zealand Ltd. in Wellington, wrote in an e-mail to clients. “An easing in Chinese funding concerns has been largely responsible for the improvement in sentiment. Soothing words from the PBOC” helped markets recover, he said.

‘Digesting’ Fed

The S&P 500 rebounded from the lowest close in nine weeks. The index has climbed 11 percent this year and is up 1.2 percent for the quarter and down 2.6 percent in June, poised for its worst month in more than a year.

Global stocks retreated June 24 as Chinese equities entered a bear market amid concern a cash crunch will hurt growth in Asia’s largest economy. China’s CSI 300 Index closed down 0.3 percent yesterday after losing as much as 6.8 percent. Futures on the Hang Seng China Enterprises Index of mainland Chinese stocks traded in Hong Kong added 1.2 percent today, rising for the first time in six days.

“People are still digesting the news from the Fed, making mental adjustments for different levels of interest rates and what those might imply for securities’ prices over the next several quarters,” John Carey, a fund manager at Boston-based Pioneer Investment Management Inc., said by phone yesterday. His firm oversees about $208 billion. “I’m encouraged the market has stabilized a little here,” he said. “It’s not a robust recovery of share prices but it’s at least a little bit of improvement after last week.”

Housing Data

The U.S. durable-goods data showed that excluding transportation equipment, where demand is volatile month to month, orders advanced 0.7 percent, topping projections. A separate report showed the S&P/Case-Shiller index of home values for 20 cities climbed 12.1 percent for the year ended April, the most since March 2006, after a 10.9 percent gain in March.

Sales of new U.S. homes in May rose to the highest level in almost five years, gaining 2.1 percent to an annualized pace of 476,000 homes to exceed all estimates in a Bloomberg survey of analysts, Commerce Department figures showed. The Conference Board’s index of U.S. consumer confidence increased to 81.4 in June from 74.3 a month earlier.

The MSCI Emerging Markets Index rebounded from a one-year low, rising 0.3 percent, while MSCI’s Asia Pacific Index ended yesterday 0.6 percent lower. The regional benchmark is trading at a valuation of 11.5 times projected earnings, the cheapest level since November, data compiled by Bloomberg show.

PBOC Comments

The Chinese central bank’s statement came hours after Ling Tao, deputy director of the Shanghai branch of the PBOC, said officials will closely monitor the money-market rate and keep it at reasonable levels.

Ling is the first PBOC official to discuss publicly the increase in rates since a cash squeeze helped send the overnight repurchase rate to a record last week. Premier Li Keqiang is seeking to wring speculative lending out of the nation’s banking system after credit expansion outpaced economic growth.

Mark Mobius, who oversees $53 billion in emerging-market investments, said he has confidence in China’s central bank and is keeping his overweight position in the nation’s equities following a five-day tumble.

“We should be confident about what the government is doing and they are cleaning up the system,” Mobius, the executive chairman of Templeton Emerging Markets Group, said in a phone interview yesterday from Monaco. “We are looking to add to Chinese exposure if the price is right. If the price comes down substantially, we would.”

Weakening Yen

Yields on 10-year U.S. Treasuries climbed from a record-low 1.379 percent set July 25, 2012 to 2.6 percent in New York. The five-year average is 2.75 percent. Volatility in Treasuries as measured by the Bank of America Merrill Lynch MOVE index climbed to 110.98 June 24, the most since November 2011. The daily average this year is 61.54.

Volatility in currencies has surged since the Fed signaled June 19 that it may start reducing stimulus this year and stop the quantitative easing program in 2014. JPMorgan Chase & Co.’s Group of Seven Volatility Index, based on currency option premiums, was at 11.52 percent yesterday after rising to 11.96 percent June 24, the highest level since January 2012.

The yen weakened 0.4 percent to 98.16 per dollar and lost 0.3 percent to 128.34 against the euro. The Dollar Index, which measures the U.S. currency against six major peers, climbed for a fifth day, rallying 0.2 percent yesterday. The Australian dollar was little changed at 92.57 U.S. cents, while New Zealand’s currency was steady at 77.37 cents.

Gold Forecasts

Crude declined 0.2 percent to $95.17 a barrel, after rising 0.2 percent yesterday. Copper futures fell 0.3 percent, and platinum and palladium prices also declined. Gold was little changed at $1,275.90 an ounce after retreating 0.2 percent yesterday. Morgan Stanley joined banks including Goldman Sachs Group Inc. and UBS AG in lowering its forecasts for gold on prospects the Fed will scale back monetary stimulus and as the U.S. economic recovery dims the precious metal’s appeal as a safe haven.

Orange juice futures for September delivery sank 4.4 percent in U.S. hours, the biggest decline for a most-active contract since March 1 and headed for the biggest monthly slump in more than a year on signs of slowing demand in the U.S.

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