Asian stocks rose and the cost of protecting bonds against default fell after a report showed US industrial production jumped twice as much as forecast. The yen appreciated following yesterday's decline against the euro.
The MSCI Asia Pacific Index rose for a fourth day, gaining 0.4 per cent to 118.88 in Tokyo. Futures on the Standard & Poor's 500 Index decreased 0.2 per cent after the index climbed 1.2 per cent yesterday, the biggest increase in two weeks. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan dropped 3 basis points to 120 basis points, Credit Agricole CIB prices show. The yen strengthened to 109.73 per euro from 110.19 yesterday in New York.
US factory output jumped twice as much as forecast in July, a signal that manufacturing is leading an economic recovery that showed signs of slowing in the second half of the year. Shares gained in New York after Potash Corp. of Saskatchewan received an unsolicited $US39 billion bid from BHP Billiton, the world's largest mining company.
“Excessive caution will ease since macro data, as well as corporate earnings, aren't that worrisome,” said Hiroichi Nishi, an equities manager in Tokyo at Nikko Cordial Securities. “Stocks have fallen to oversold levels, so further declines should be limited.”
Japan's Nikkei 225 Stock Average advanced 0.4 per cent and Taiwan's Taiex increased 0.2 per cent. The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, lost 0.6 per cent.
BHP slides
BHP Billiton slumped 3.5 per cent in Sydney after its takeover offer was rejected by Potash. The Melbourne-based company may be preparing to take its bid directly to Potash shareholders and is unlikely to raise it before talks with investors, said two people with direct knowledge of the matter.
“Potash is in play,” said Prasad Patkar, who helps manage $US1.6 billion at Sydney-based Platypus Asset Management Pty, including BHP shares. “Price action overnight on Potash tells you a higher bid is coming. You can't rule out BHP going hostile.”
Honda and Nintendo, which both get more than 40 per cent of their revenue from North America, advanced at least 1.9 per cent. Westfield Group, the world's largest owner of shopping centers, surged 2 per cent after reporting higher-than-estimated profit. China Everbright Bank advanced 17 per cent on its first day of trading after completing the nation's second-largest initial public offering this year.
Bond risk drops
The cost of protecting Asia-Pacific bonds from non-payment fell, according to traders of credit-default swaps. The Markit iTraxx Asia index headed for the biggest decline since Aug. 2 and its lowest close since Aug. 10, according to CMA in New York. The Markit iTraxx Japan index fell 4 basis points to 114 basis points, Morgan Stanley prices show. The Markit iTraxx Australia index decreased 4 basis points to 116.5, according to ICAP.
Credit-default swaps on BHP Billiton jumped 12 basis points to 84 basis points in Sydney, the biggest increase since May 7, according to prices from Nomura Holdings and CMA.
Japan's currency advanced to 85.38 against the dollar from 85.53, after rising to 84.73 on Aug. 11, the strongest since 1995. The US currency traded at $1.2843 per euro from $1.2885.
“Exporters appear to be selling the euro-yen and the dollar-yen on rallies,” said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. “The yen is likely to be supported.”
Oil dropped to near a five-week low, trading 0.3 per cent lower at $US75.56 a barrel in New York after an industry-funded report showed an increase in US crude and gasoline stockpiles, signaling a recovery in fuel demand may falter. An Energy Department report today may show that crude stockpiles dropped by 1 million barrels, according to a Bloomberg News survey.
US industrial output climbed 1 per cent as factories churned out more computers, appliances, automobiles and industrial machinery, the Federal Reserve said yesterday in Washington. Another report showed work began last month on fewer houses than forecast.
