Thursday July 14, 2016
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Tokyo stocks have led the revival in Asian equities this week after Prime Minister Shinzo Abe promised a package of fiscal stimulus. — Reuters picTokyo stocks have led the revival in Asian equities this week after Prime Minister Shinzo Abe promised a package of fiscal stimulus. — Reuters picHONG KONG, July 14 — The rally that drove Asian stocks to levels last seen in April showed signs of flagging as investors await details of Japan’s stimulus plans and the corporate earnings season begins in earnest.

The pound strengthened before a forecast cut in UK interest rates.

The MSCI Asia Pacific Index was set for its smallest gain this week, after rallies in US and European shares stalled in the last session.

The Topix index rose in Tokyo and the yen weakened amid speculation Japan could resort to so-called helicopter money, which involves the central bank directly funding government spending.

Singapore Exchange Ltd announced a temporary halt to all equities trading, without giving a reason.

South Korea’s won rose following a monetary policy review, while crude oil rebounded from a two-month low.

Tokyo stocks have led the revival in Asian equities this week after Prime Minister Shinzo Abe promised a package of fiscal stimulus.

Chief Cabinet Secretary Yoshihide Suga said yesterday that helicopter money was not being considered, refuting a report in the Sankei newspaper that it was being looked at.

US shares are at an all-time high and investors will be looking to see whether better-than-expected economic data have helped arrest a slide in the earnings of America’s biggest companies.

“Investors remain very skittish and it won’t take much to rattle sentiment,” said James Audiss, a senior investment adviser at Shaw and Partners in Sydney, which manages about US$7.4 billion (RM29.2 billion).

“We’re watching the yen-dollar rate really closely after the calls to do helicopter money in Japan got dialed back.”

South Korea’s central bank left interest rates unchanged at a record low, as forecast by all 20 economists in a Bloomberg survey, and lowered its projections for economic growth and inflation. Singapore’s expansion quickened to an annualised 0.8 per cent in the second quarter, from 0.2 per cent in the prior three months, data showed. Asian companies reporting earnings include Fast Retailing Co and Taiwan Semiconductor Manufacturing Co, while JPMorgan Chase & Co and BlackRock Inc are among US firms due to announce results.

Stocks

The MSCI Asia Pacific Index added 0.1 per cent as of 1:34pm in Tokyo, after advancing 3.6 per cent over the last three sessions. The Topix gained 0.7 per cent, headed for its highest close in a month. Singapore’s benchmark declined 0.1 per cent before trading was suspended on South-east Asia’s largest stock market.

Nintendo Co jumped 16 per cent to a five-year high, boosted by the success of its Pokemon Go mobile game.  China Steel Corp surged in Taipei by the most since October before the company announces its product prices for September. Hyundai Motor Co fell as much as 3.3 per cent in Seoul after workers in South Korea voted to strike over wages and working conditions.

Futures on the S&P 500 Index were little changed after the US benchmark eked out another record close despite climbing less than 0.1 per cent yesterday. A Citigroup Inc  gauge that tracks the degree to which the nation’s economic data are exceeding economists’ projections has climbed to the highest level since January 2015. Analysts predict second-quarter profits will drop 5.7 per cent at S&P 500 firms, which would make it the fifth straight quarterly decline, the longest streak since 2009.

Currencies

The pound was 0.4 per cent stronger versus the dollar, after earlier weakening as much as 0.3 per cent. Thirty of 54 economists surveyed by Bloomberg predict the Bank of England will lower its benchmark interest rate today, with a majority of those seeing a 25 basis-point reduction to 0.25 per cent.

South Korea’s won rose as much as 0.8 per cent to a two-month high. The Bank of Korea lowered its economic growth forecast for this year to 2.7 per cent, from an April projection of 2.8 per cent, and trimmed its inflation estimate to 1.1 per cent from 1.2 per cent. The revisions were more modest than anticipated and suggest there’s no urgent need for borrowing costs to be cut, said  Hong Sup Shin, head of fixed-income at Truston Asset Management in Seoul.

The Japanese yen was down 0.2 per cent, after earlier strengthening as much as 0.5 per cent. Koichi Hamada, a key economic adviser to Abe, said yesterday that boosting fiscal and monetary stimulus at the same time would be a good strategy, though helicopter money would be a “very risky gamble.”

Commodities

West Texas Intermediate crude oil was up 1.3 per cent at US$45.32 a barrel, after tumbling 4.4 per cent yesterday as US data showed an unexpected increase in gasoline inventories.

“Every time we have seen these big pullbacks, there is quite a lot of strong buying around that US$44, US$45 level,” said Angus Nicholson, a markets analyst in Melbourne at IG Ltd “There are definitely active participants in the market who are very happy to be picking up oil at that price.”

Gold declined 0.4 per cent to US$1,337.23 an ounce, after advancing 0.7 per cent in the last session. It was trading at about US$1,260 before Britain’s June 23 vote to leave the European Union.

Bonds

Australian government bonds led gains in Asia, with yields on notes due in a decade dropping five basis points to 1.93 per cent. Similar-maturity US Treasuries yielded 1.47 per cent, little changed following a decline of four basis points in the last session. — Bloomberg

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