Asian Stocks Climb Led by Japan as Yen Weakens With Gold

Asian Stocks Climb Led by Japan as Yen Weakens With Gold

Asian stocks rose for a fourth day, led by Japanese shares after a report the government is weighing a corporate tax cut. The yen dropped for a second day against the dollar before U.S. retail sales data, while gold declined.

The MSCI Asia Pacific Index added 0.5 percent by 1 p.m. in Tokyo, set for its longest winning run since the start of July. Japan’s Topix Index gained 1.4 percent, while Standard & Poor’s 500 Index futures increased 0.1 percent after the gauge dropped for a second day in New York. The yen lost 0.5 percent to 97.35 per dollar as gold fell 0.2 percent and silver dropped 0.5 percent. Australian bonds declined.

Machinery orders in Japan rose 4.9 percent from a year earlier in June, beating the 2.6 percent increase projected by economists in a Bloomberg survey. Prime Minister Shinzo Abe is mulling a tax cut for companies, Nikkei newspaper reported, citing unidentified government officials. U.S. retail sales probably rose for a fourth consecutive month in July, while euro zone industrial production expanded in June, according to economist estimates before reports today.

“The yen returning to the 97 level is positive and a corporate tax cut would be reflected on company earnings directly so its impact on the market would be huge,” said Toshihiko Matsuno, a strategist at Tokyo-based SMBC Friend Securities Co., a unit of Japan’s second-biggest lender by market value. “The U.S. economy isn’t doing too badly and the dollar was sold off too much.”

About 51 percent of the companies on the Asia-Pacific gauge that have posted profits this earnings season beat analysts’ estimates, data compiled by Bloomberg show. More than three shares rose for each that fell in the regional index.

Kospi, Hang Seng

Honda Motor Co., which gets about 83 percent of sales from overseas, increased 1.7 percent in Tokyo, pacing gains among Japanese exporters. Sony Financial Holdings Inc., the financial services unit of electronics maker Sony Corp., jumped 2.7 percent after proposing a higher dividend.

The Nikkei 225 Stock Average rose 1.7 percent. Korea’s Kospi index added 1 percent as Australia’s S&P/ASX 200 Index gained 0.3 percent. Hong Kong’s Hang Seng Index was up 0.7 percent as China’s Shanghai Composite Index was little changed.

The Bloomberg Dollar Index, which tracks the greenback against 10 major currencies including the yen, rose 0.1 percent today after gaining 0.4 percent yesterday. The yen slipped 0.5 percent to 129.57 per euro, weakening for a second day.

Australia’s currency slipped 0.2 percent to 91.28 U.S. cents after business confidence slumped to an eight-month low and Treasury confirmed a blow out in the fiscal deficit, complicating Prime Minister Kevin Rudd’s bid for re-election. New Zealand’s dollar dropped 0.2 percent to 79.96 cents.

Ringgit, Won

Malaysia’s ringgit depreciated 0.3 percent to 3.2578 per dollar after touching 3.2597, the weakest level since July 1, 2010. The Korean won lost 0.2 percent versus the greenback.

Retail sales in the U.S. probably climbed 0.3 percent in July after a 0.4 percent advance in June, according to the median of 66 estimates compiled by Bloomberg before data today. More reports this week may show gains in U.S. manufacturing and residential construction.

Industrial production in the euro region rose 1 percent in June, after contracting 0.3 percent in May, the median of 37 estimates shows, while gross domestic product is predicted to have grown 0.2 percent in the second quarter, the first expansion since 2011, according to the median of 41 estimates. The GDP report is released tomorrow.

Bonds, Gold

Australia led declines among developed-market bonds in Asia, with the benchmark 10-year note yield rising eight basis points to 3.76 percent. The 10-year U.S. Treasury yield added one basis point to 2.63 percent, adding to a four basis-point advance yesterday.

Gold retreated to $1,335.79 an ounce, after rallying 1.8 percent yesterday. Silver dropped to $21.3025 an ounce, after climbing almost 10 percent over the past four days.

The cost of insuring corporate bonds from non-payment in Australia declined, according to credit-default swap traders. The Markit iTraxx Australia index fell 2 basis points to 116 basis points, according to Westpac Banking Corp. prices. The benchmark is set to drop for a fourth straight day, poised for its lowest level since Aug. 6, according to data provider CMA.