Asia Stocks Gain as Yen, Dollar Slide on Stimulus

Asian stocks rose, with the region’s benchmark index set for its biggest two-day rally in a month, as Citigroup Inc. raised global profit estimates and Japan’s shrinking economy lifted chances for more stimulus. The yen and dollar fell against the euro for a fourth day. Silver rallied.

The MSCI Asia Pacific Index added 0.4 percent at 12:33 p.m. in Tokyo, extending yesterday’s 0.9 percent jump. Standard & Poor’s 500 Index futures advanced 0.1 percent. Japan’s currency fell to 116.57 per euro from 116.37 yesterday, while the Dollar Index lost 0.3 percent. The Singapore dollar and Malaysian ringgit both advanced 0.5 percent versus the greenback. S&P’s GSCI Index of 24 raw materials gained 0.2 percent, with silver surging 1.2 percent and oil climbing 0.3 percent in New York.

The Bank of Japan may face increased pressure to add stimulus after the economy shrank more than estimated following the March 11 temblor, while Federal Reserve Bank of St. Louis President James Bullard said the U.S. central bank may keep its monetary-policy unchanged until late this year. Singapore raised its growth forecast for 2011, while Citigroup predicted global per-share earnings may rise 18 percent this year.

“People are increasingly reassured that there’s plenty of liquidity to support markets,” John Praveen, the Newark, New Jersey-based chief investment strategist at Prudential International Investments Advisors, said in a Bloomberg Television interview. “The U.S. economy is going to rebound in the second quarter and interest rates are going to remain low. Reconstruction is going to be funded by public spending and the Bank of Japan’s additional stimulus.”

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http://preview.bloomberg.com/news/2011-05-19/yen-dollar-slide-on-record-stimulus-outlook-asia-stocks-silver-advance.html

Asian Stocks, Dollar, Copper Climb as China Refrains From Increasing Rates

Asian stocks and commodities advanced while the dollar strengthened for a sixth day after China refrained from raising interest rates and as optimism increased that the U.S. economic recovery is gathering steam.

The MSCI Asia Pacific Index climbed 0.3 percent to 133.42 as of 12:10 p.m. in Tokyo. Futures on the Standard & Poor’s 500 Index were little changed after the gauge advanced for a fourth day on Dec. 10. Copper rallied as much as 1.1 percent in London and rubber rose to a record. The Dollar Index, which tracks the currency against six major peers, added 0.2 percent, and was set for its longest stretch of gains since June.

China on Dec. 10 ordered banks to set aside larger reserves and didn’t announce an interest-rate increase, even as data released the following day showed the inflation rate reached 5.1 percent in November while industrial-output growth and retail sales grew. As Federal Reserve policy makers meet tomorrow, a U.S. Commerce Department report will likely show retail sales climbed for a fifth straight month, adding to data that showed consumer confidence increased in December to a six-month high.

“A rate increase would produce a greater impact on the wider economy, so their cautious measure is positive for the market” said Lam Chee Mun, a fund manager at TA Investment Management in Kuala Lumpur.

Almost two stocks rose for every one that fell on the MSCI Asian index, which has climbed 11 percent this year. The Shanghai Composite rose 1.2 percent, trimming its 2010 loss to 12 percent, still the steepest drop among Asian markets this year. China Vanke Co., the nation’s largest developer by value, rose 1.2 percent.

‘More Effective’

Consumer prices rose a more-than-forecast 5.1 percent from a year earlier, a statistics bureau report showed in Beijing over the weekend. Producer-price inflation was 6.1 percent, higher than any of 28 economists surveyed by Bloomberg News had estimated. The central bank boosted reserve requirements by 50 basis points starting Dec. 20, the third increase in five weeks, instead of raising borrowing costs.

“The government seems to be using reserve requirements at the moment as a more effective tool,” Hugh Simon, co-manager of the Dreyfus Greater China Fund, said in a Bloomberg Television interview. “They need to have some relief about inflation. Inflation this time, rather than 2008, is coming from the demand side as people are getting paid more.”

Westpac Banking Corp. paced a rally in Australia’s four largest lenders after analysts including Jarrod Martin of Credit Suisse Group AG said the companies may emerge as victors from Treasurer Wayne Swan’s package to promote banking competition. Westpac, Commonwealth Bank of Australia, National Australia Bank Ltd. and Australia & New Zealand Banking Group Ltd. rose at least 1.1 percent each after Swan’s 13-point plan stopped short of investors’ most pessimistic expectations.

Copper, Rubber

Copper for three-month delivery on the London Metal Exchange rose to as high as $9,087 a metric ton, near the record $9,091 reached on Dec. 9. Zinc gained 2.4 percent while nickel rose 0.6 percent. Rubber futures in Tokyo advanced to an all- time high of 390.3 yen per kilogram following rains in Thailand, the largest exporter.

The dollar rose against most of its 16 major counterparts and traded at $1.3188 per euro from $1.3226 in New York on Dec. 10. Retail sales climbed 0.6 percent in November after advancing 1.2 percent in October, according to the median estimate of economists in a Bloomberg News survey before tomorrow’s figures. Confidence among U.S. consumers increased in December to a six- month high, the Thomson Reuters/University of Michigan preliminary index of consumer sentiment showed on Dec. 10.

Treasuries fell before the release of the data, sending yields on the 10-year note higher by two basis points to 3.34 percent. Fed policy makers may signal this week they will contemplate boosting purchases of government debt to support job growth. Chairman Ben S. Bernanke said earlier this month purchases of government securities may be increased beyond the $600 billion already announced under the Fed’s so-called quantitative easing program.

Euro’s Survival

The euro retreated against all 16 major peers before a Dec. 16 and 17 European Union meeting, where leaders will discuss the creation of a permanent mechanism to shore up over-indebted countries. Against the yen, the shared currency traded at 110.82 from 111.04 in New York.

The currency’s survival is “non-negotiable,” requiring budget vigilance and closer economic cooperation to overcome “structural weaknesses” within the euro region, German Chancellor Angela Merkel and French President Nicolas Sarkozy said Dec. 10. Splits between EU governments on how to contain the debt crisis have emerged, with Germany opposed to euro-area bonds that Italy, Belgium and Luxembourg favor.

“Europe’s large nations may find it hard to provide further aid when they think about their own domestic factors,” said Masahide Tanaka, a senior strategist in Tokyo at Mizuho Trust & Banking Co., a unit of Japan’s second-largest bank. “The euro is struggling to rise, as the dollar is regaining strength.”

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http://www.bloomberg.com/news/2010-12-13/asian-stocks-dollar-copper-climb-as-china-refrains-from-increasing-rates.html

A December to remember? Why time may be ripe for stock gains

Performance of the Standard & Poor's 500 index over the past twelve months.

Stocks soared on the first day of December, raising hopes that the final month of the year will live up to its reputation as the best month for stock performance.

Investors drove the Dow Jones industrials up 250 points, and the broad market jumped 1.6%. Fueling the rally: a one-two punch of bullish news on jobs at home and manufacturing in the U.S. and China.

The improving tone on the economy, coupled with rising hopes that the European Central Bank will announce new measures to stem contagion caused by debt problems in Ireland and other eurozone countries, gave investors the green light to pile back into risky assets such as stocks.

December has been the No. 1 month for stock returns for the Standard & Poor's 500 index since 1950, according to the 2011 edition of the Stock Trader's Almanac. The large-company stock index has posted average gains of 1.65% in December.

The consistency of the gains in December is also impressive, with gains 77% of the time since World War II, vs. 59% for all 12 months, S&P says.

The market's ability to consistently fare well in December is due in part to the tendency of investors to stop viewing the market with a short-term lens, but instead using the end of the year to look at opportunities in stocks over a longer time period, says Sam Stovall, chief investment officer at S&P.

"By extending the forecasting time frame, it allows more time for investors' optimistic forecasts to come true," Stovall says.

The fact the winning pattern has been consistent feeds on itself, and investors buy stocks so as not to miss out on the rally. "It tends to be self-fulfilling," adds Jeff Kleintop, chief market strategist at LPL Financial.

The odds of the rally continuing are good if economic data continue to come in better-than-expected, Kleintop adds. The reason: It puts a big dent in fears of an economic relapse. The ADP Employer Services report Wednesday, for example, said private companies added 93,000 jobs in November, which suggests employment trends are improving. China's report of strong manufacturing last month reassures investors "that the major driver of global growth remains intact," Kleintop says.

The improving economic data in the U.S. have overshadowed debt problems in Europe and geopolitical risks around the globe. The better data also mean investors could soon be hearing more positive outlooks from corporate CEOs, adds Kate Warne, market strategist at Edward Jones.

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http://www.usatoday.com/money/markets/2010-12-02-mart02_ST_N.htm

Before Business Leaders, Bernanke Discusses Unemployment’s Toll on Americans

Ben Bernanke, right, the Fed chairman, with I.B.M.'s chief executive, Samuel Palmisano, in Ohio.

COLUMBUS, Ohio — The Federal Reserve chairman, Ben S. Bernanke, found some respite on Tuesday from the second-guessing the central bank has faced since it announced a $600 billion effort to stimulate the slow recovery.

During a 75-minute discussion here with five business leaders, including the chief executives of I.B.M. and Ford Motor as well as the founder of a local chain of ice cream stores, inflation and monetary policy were not even mentioned, much less debated.

Mr. Bernanke did, however, emphasize the toll high unemployment was taking on families and on the share of the unemployed — more than 40 percent — who have been jobless for at least six months.

“At the pace of growth that we’re seeing now, we’re not growing fast enough to materially reduce the unemployment rate,” he said. The economy needs to grow at an annualized rate of 2 to 2.5 percent just to accommodate new workers coming into the labor force, he said. Mr. Bernanke has made this point repeatedly this year.

At 9.6 percent, the unemployment rate is about where it was when the recession officially ended in June 2009, Mr. Bernanke said, and only about a million of the 8.5 million jobs lost since the peak of the last economic expansion have been restored.

“Part of the barrier to faster growth and recovery is confidence in households that they will be financially secure and that they can make purchases and take chances in changing careers and changing locations,” Mr. Bernanke said. “With unemployment so high, that confidence is hard to come by.”

The discussion, organized by the Federal Reserve Bank of Cleveland and held at the Fisher College of Business at Ohio State University, was part of an effort by Mr. Bernanke to reach out more.

“We spend a lot of time, of course, looking at data, sitting in Washington, looking at the screen, but there’s only so much you can learn from that,” he said.

Sandra Pianalto, the president of the Cleveland Fed, who moderated the discussion, referred obliquely to the firestorm the Fed has faced in recent weeks. “Through my interactions with Ben, I’ve learned that extreme circumstances often require very creative and aggressive policy responses, and that the right decisions sometimes aren’t the most popular decisions,” she said.

While none of the executives criticized the Fed, Samuel J. Palmisano, the chief executive of I.B.M., said that uncertainty, particularly over regulations, was holding back businesses, not financial constraints.

“Clearly, there’s tons of liquidity, as you know,” he told Mr. Bernanke, who was seated to his left. “There’s probably more than we could consume. It’s not a credit issue. It’s not the financial system or a banking issue. I think at the end of the day it’s clarity.”

But two of the three local business owners on the panel said financial conditions were still tight. “Credit is much more tight today than it was in past years,” said Dwight E. Smith, founder of Sophisticated Systems, a provider of information technology services.

Curtis J. Moody, co-founder of Moody Nolan Architects, said, “The lines of credits are more difficult to get, and they’re lower.”

The business leaders agreed that the partisan climate in Washington was not helping matters. “Exports aren’t partisan, competitive tax policies aren’t partisan,” Mr. Palmisano said. “Economic expansion, job creation, isn’t political at the end of the day.”

Alan R. Mulally, the chief executive of Ford, said the government needed “a laser focus on creating an environment where businesses can grow.” He said that “currencies need to be set by the market” and “not manipulated,” and added, “We need to have trade agreements that actually allow us to export.”

That appeared to be a reference to a free trade agreement with South Korea that was negotiated by the Bush administration and is opposed by Ford. The Obama administration wants to complete the deal and submit it to Congress, but negotiations with South Korea have become stuck over restrictions on American auto and beef exports.

Mr. Bernanke said he took away from the discussion the need for clarity on regulatory, trade and fiscal matters. He also emphasized the importance of government support for technological innovation and the need to improve public education, community colleges and work force training.

Several M.B.A. students in the audience said that they had hoped Mr. Bernanke would discuss the Fed’s decision to buy bonds to reduce long-term interest rates, a topic they had debated in class. The students were generally skeptical about the strategy’s effectiveness.

“If you inflate the economy without doing anything about growth, you’re just printing money,” said one of the students, Jyotisko Sinha, 27.

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http://www.nytimes.com/2010/12/01/business/economy/01fed.html?partner=rss&emc=rss