Inside Financial Markets

Asian stocks rallied, led by the biggest gain in Japan’s Topix (TPX)

asia-market-afpAsian stocks rallied, led by the biggest gain in Japan’s Topix (TPX) index in more than two years, after reports showed Japan’s economy and U.S. employment rose more than estimated. Metals declined as trade data in China trailed estimates, while the yen weakened.

The MSCI Asia Pacific Index rose 1.2 percent as of 11:57 a.m. in Tokyo as the Topix index surged 3.8 percent for its biggest gain since March 2011. Standard & Poor’s 500 Index futures added 0.1 percent after the gauge climbed 1.3 percent on June 7, the biggest daily advance since April. The yen fell 0.4 percent and South Korea’s won lost 0.5 percent. Copper and lead sank at least 0.8 percent. Bond risk in Asia declined.

Visitors look at an electronic board displaying stock figures at the Tokyo Stock Exchange in Tokyo. Photographer: Junko Kimura/

June 10 () — Martin Schulz, senior economist at Fujitsu Research Institute in Tokyo, talks about the outlook for Japan’s economy and the government’s policies. Japan’s economy grew more than the government initially forecast in the first quarter, helping Prime Minister Shinzo Abe to sustain confidence in his campaign to defeat deflation. Schulz speaks with Susan Li on  Television’s “First Up.” (Source: )

Japan’s gross domestic product expanded an annualized 4.1 percent in the first quarter, compared with a preliminary calculation of 3.5 percent. American employers took on 175,000 workers in May, beating the 163,000 median forecast in a  survey. China’s industrial production rose a less-than-forecast 9.2 percent last month, while export gains were at a 10-month low and imports dropped, weekend data showed.

“Last week’s decline was huge, so investors are going to be buying on dips,” said Norihiro Fujito, a senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co., the brokerage unit of Japan’s biggest financial group by market value. “While the U.S. jobs market is improving, it’s not enough to exit monetary easing.”

The yen traded at 97.96 per dollar and was 0.3 percent lower at 129.37 per euro. Options show there’s about an even chance it will gain to 90 per dollar by year-end, from as high as 95 last week and an almost five-year low of 103.74 on May 22.

Topix Volatility

Japanese shares are rebounding from a three-week, $600 billion rout as the Government Pension Investment Fund said June 7 it will sell bonds to buy equities. Stocks in Hong Kong, Taiwan, Korea, Singapore and the Philippines also climbed.

All 33 industry groups in the Topix advanced. Japan’s broadest equity measure has swung an average of 3.8 percent daily since May 22, when it closed at its highest level since August 2008. Historic volatility is at levels not seen since the 2011 earthquake and nuclear disaster.

Mazda Motor Corp. and Toyota Motor Corp. jumped at least 6 percent. Sharp Corp. (6753) surged 12.5 percent after Qualcomm Inc. agreed to a second share purchase. Hyundai Merchant Marine Co. jumped by the daily limit for a second day after North and South Korea agreed to minister-level negotiations this week to discuss reopening a jointly run industrial park. Stock markets in China and Australia are closed today for public holidays.

Metals Decline

Copper in London slumped for a third day, sliding 0.8 percent to $7,172 a metric ton, as data in China showed fixed-asset investment growth slowed and new yuan loans fell. May exports rose 1 percent from a year earlier, down from 14.7 percent in April, and imports dropped 0.3 percent after a crackdown on fake trade invoices. Lead fell 1.6 percent.

“The China train is hardly derailing, but it does seem to be running out of puff somewhat for the moment,” Sharon Zollner, a senior economist at ANZ Bank New Zealand Ltd. in Wellington, wrote in a note to clients today.

The New Zealand dollar fell 0.5 percent to 78.43 U.S. cents as Australia’s currency slid 0.7 percent to 94.30 U.S. cents.

Asian currencies weakened on concern slower growth in China will hurt exports in the region. The won fell to 1,122.75 per dollar, snapping a four-day gain. Malaysia’s ringgit lost 0.6 percent to 3.1174 per dollar and Thailand’s baht retreated 0.3 percent to 30.713 per dollar.

The cost of insuring corporate bonds against non-payment in Asia fell for the first time in almost a week. The Markit iTraxx Japan index lost 5.5 basis points to 94.5 basis points, and the Markit iTraxx Asia index slid 5 basis points to 126, Citigroup Inc. and Royal Bank of Scotland Group Plc prices show. Both measures are poised for their first decline since June 4, according to data provider CMA.


Ali Nawaz

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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)