Asian stocks and oil rose as earnings beat estimates, boosting confidence in the global economic recovery. The dollar gained on speculation Group of 20 finance chiefs will pledge to refrain from weakening currencies.
The MSCI Asia Pacific Index climbed 0.2 per cent to 129.91 in Tokyo. Futures on the US Standard & Poor's advanced 0.1 per cent. The Dollar Index strengthened 0.1 per cent to 77.492, set for a 0.6 per cent appreciation in the past five days. Crude oil jumped 0.7 per cent to $US81.07 a barrel.
Earnings at companies from American Express to eBay have beaten analyst predictions, bringing the percentage of companies in the MSCI World Index that reported better-than-estimated profit in the past month to 72 per cent. Finance ministers plan to say members will refrain from “competitive undervaluation” of currencies, said an official from a member country, citing a draft statement and speaking on condition of anonymity.
“With the economic data being quite mixed, corporate earnings are going to be a key focal point,” said Chris Hall, who helps oversee the equivalent of $US3.3 billion at Argo Investments in Adelaide. “People are looking for outlook comments that reaffirm the view that hopefully the recovery is underway. There's obviously still a lot of caution over that.”
Japan's Nikkei 225 Stock Average advanced 0.4 per cent and South Korea's Kospi Index gained 0.9 per cent. Australia's S&P/ASX 200 Index rose 0.2 per cent. The S&P 500 advanced 0.2 per cent yesterday as better-than-estimated earnings helped offset a slump in financial companies amid speculation that banks face more losses from bad mortgages.
Earnings improve
Brambles, the world's biggest supplier of wooden pallets that gets almost half of its revenue from the Americas, advanced 2.5 per cent in Sydney. Canon, a Japanese camera maker that gets about 80 per cent of its revenue overseas, climbed 1.2 per cent in Tokyo. Kawasaki Heavy Industries rose 2.6 per cent on greater-than-forecast net income.
LG, the world's second-largest maker of liquid- crystal displays, advanced 2.8 per cent in Seoul after its third- quarter profit beat analysts' estimates. Daewoo Securities raised its share-price estimate by 7 per cent to 48,000 won, citing an expected improvement in earnings in the first half of 2011, according to a report today. American Express, the biggest credit-card issuer by purchases, said third-quarter profit jumped 70 per cent, more than analysts estimated.
China drops
The MSCI Asia Pacific has risen 19 per cent from its 2010 low on May 25 on speculation growth in profits will weather Europe's debt crisis, Chinese steps to curb property-price inflation and a faltering US economy.
China's Shanghai Composite Index fell 0.9 per cent, the most in a month, as banks and commodity producers dropped on higher interest-rate concerns. Industrial & Commercial Bank of China led a gauge of financial stocks lower for a second day on concern the fastest inflation in 23 months will prompt policy makers to add to this week's rate increase. Jiangxi Copper, China's biggest producer of the metal, slid 3.7 per cent.
“The market needs a breather after a big rally starting in the month,” said Wei Wei, an analyst at West China Securities in Shanghai. “Some of the biggest gainers such as metals and coal producers will see outflows.”
Currency outlook
The dollar was at $US1.3907 per euro from $US1.3920 in New York yesterday. The greenback slipped to 81.23 yen from 81.33.
“There are concerns that G-20 policy makers will discuss competitive undervaluation as a key agenda item,” said Naoto Minatogawa, a currency analyst in Tokyo at Himawari Securities. “This makes it easier for investors to buy back the dollar, which has fallen on speculation of additional monetary easing.”
Finance ministers and central bankers will say after G-20 talks conclude in Gyeongju, South Korea, on Oct. 23 that they want a “more market-determined exchange rate system that minimizes adverse effects of excess volatility and disorderly movements in exchange rates,” the G-20 official said.
The yen rose against most of its counterparts after Japan's Finance Minister Yoshihiko Noda said that that it is not clear yet if a statement from G-20 policy makers will refer to foreign-exchange issues. Asked at a news conference if currencies will be mentioned in the statement, Noda said, “there's still no clear outlook.”
Oil gains
Oil retraced some of yesterday's losses after reports showed US jobless claims fell and oil output for September increased in China, the world's biggest energy user. Chinese crude production gained 9 per cent in September from a year earlier, the National Bureau of Statistics said yesterday.
“Fundamental signals were positive, with oil output in China at near record levels, suggesting strong demand for crude,” said Mark Pervan, head of commodity research at ANZ in Melbourne. “Economic data from other key nations were also positive, with US jobless claims declining last week.”
Copper for three-month delivery was little changed at $US8312 per metric ton. The metal was heading for a drop of 1 per cent this week, snapping five weeks of gains, as the dollar was on track to end five weeks of losses. Gold for immediate delivery was little changed at $US1326.45 an ounce. The precious metal was on course for its first decline in six weeks.