Asian Stocks Rise With Ringgit; U.S., Europe Futures Gain 

Asian stocks rose for the fourth straight week and emerging-market currencies strengthened after the European Central Bank cut interest rates to fight deflation. The dollar headed for its best week since April versus the yen and U.S. and European index futures climbed before payroll data.

The MSCI Asia Pacific Index added 0.3 percent by 7:10 a.m. in London, heading for its highest close since Oct. 22. Standard & Poor’s 500 Index futures added 0.1 percent and Euro Stoxx 50 contracts increased 0.3 percent. Japan’s Topix gauge rose for the 11th time in 12 days while the dollar is on track for a 0.6 percent gain against the yen this week. The Malaysian ringgit strengthened 0.4 percent versus the greenback and China’s renminbi increased the most since May 29. Copper and tin retreated while gold held yesterday’s 0.8 percent gain.

The ECB took deposit rates negative, the first major central bank to do so, and offered liquidity to lenders to encourage credit growth. Analysts predict 215,000 workers were added to nonfarm payrolls in the U.S. in May, after the biggest increase since the start of 2012 for April. The People’s Bank of China boosted the yuan reference rate by the most since January and German industrial production rose less than estimated.

The ECB’s moves are “growth supportive and a lower interest-rate backdrop is positive for equities,” said Chris Green, director of economics and strategy in Auckland at First NZ Capital Ltd., which manages $1.4 billion. “There’s still the impression that the labor market in the U.S. is a relatively positive story. But it would be a surprise if momentum was maintained at the levels we saw in April, and so the expectation is that we’ll see some modest pullback.”

Asian Stocks

Nonfarm payrolls in the U.S. rose by 288,000 people in April, the most since a 360,000 advance in January 2012. Claims for American unemployment benefits climbed by a more-than-estimated 312,000 in the week to May 31, data yesterday showed.

The MSCI Asia Pacific gauge is up 1.2 percent this week, poised to cap the longest run of weekly gains since March. The Topix (TPX) added 0.2 percent today, headed for a weekly advance of 2.7 percent. The yen, regarded along with gold as a haven investment, was little changed at 102.33 per dollar after gaining 0.3 percent yesterday.

Hong Kong’s Hang Seng Index slipped 0.3 percent, erasing a weekly gain. A gauge of Chinese companies listed in the city slid 0.2 percent as the Shanghai Composite Index retreated 0.9 percent. Australia’s S&P/ASX 200 Index rose 0.6 percent. South Korean markets are closed today for the second time this week.

Negative Rate

Futures point to a higher open in Europe, where the Stoxx Europe 600 Index closed near a six-year high yesterday. The euro was little changed at $1.3657 after jumping 0.5 percent yesterday. The 18-nation currency touched $1.3670 last session, the strongest intraday level since May 22 as prospects the ECB’s efforts will support growth fueled demand for European assets.

The ECB’s deposit rate was cut to minus 0.1 percent, while the benchmark refinancing rate was reduced by 10 basis points to 0.15 percent, with economists surveyed by Bloomberg projecting a deeper cut to 0.1 percent. The marginal rate was shaved by 35 basis points, or 0.35 percentage point, to 0.4 percent.

ECB President Mario Draghi said the central bank will begin new, “targeted” offerings of liquidity to banks to encourage them to lend money to the real economy. While conceding that rates are at the lower bound “for all practical purposes,” he signaled the ECB is willing to move again.

‘Massive’ Support

The yuan traded in Hong Kong jumped the most in a week after the central bank raised the currency’s daily fixing by the most in five months. The PBOC set the reference rate 0.14 percent stronger today, the biggest gain since Jan. 10, at 6.1623 per dollar.

The International Monetary Fund said yesterday China’s policy makers still have tools to keep economic growth at a medium to high level. Trade data on June 8 may show exports climbed 6.6 percent from a year earlier in May, more than April’s 0.9 percent growth, according to the median estimate in a Bloomberg News survey.

The ringgit gained to 3.2162 per dollar. Russia’s ruble rose a third day, adding 0.1 percent to 34.7 per U.S. dollar.

The Philippine peso increased 0.3 percent to 43.662 per dollar in its first back-to-back daily gain since May 9, while the Thai baht climbed 0.3 percent to 32.564 versus the greenback and India’s rupee strengthened 0.2 percent to 59.1975.

“The fact that the ECB is taking further measures is a useful reminder of the massive policy support that global markets are still receiving, which should be supportive for global growth and risk assets,” Christian Hawkesby, head of fixed income and economics in Wellington at Harbour Asset Management Corp.

Jobs Data

S&P 500 futures are signaling the gauge will extend yesterday’s record close of 1,940.46. The U.S. Bureau of Labor Statistics report today may also show private payrolls, which exclude government agencies, increased 210,000 in May after a 273,000 gain in the previous month, according to the median estimate in a Bloomberg survey of economists.

Fed officials are watching the labor market as they move to complete their bond-purchase program late this year and start considering the timing of the first interest-rate increase since 2006. Central-bank stimulus has helped propel the S&P 500 up by as much as 187 percent from a bear-market low reached in March 2009. The gauge rose 0.7 percent yesterday to an all-time high of 1,940.46.

Gold was little changed on the spot market at $1,254.93 an ounce, after jumping 0.8 percent last session and reaching the highest intraday price since May 30. The precious metal has gained 0.4 percent this week, after falling the previous two weeks.

Copper for three-month delivery on the London Metal Exchange slipped 0.3 percent to $6,763 a ton and tin fell 0.5 percent to $23,140. Nickel is headed for its second straight weekly decline.

 

Source: bloomberg

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