Asian Stocks Rebound From Three-Day Drop as Aussie, Metals Prices Advance By Shiyin Chen - Sep 6, 2011

Asian stocks rebounded from a three- day drop that left valuations at the cheapest level since 2008, and copper rose for the first time in five days. The Australian dollar gained after the economy grew at a faster-than-forecast pace and Treasury 10-year yields climbed above 2 percent.

The MSCI Asia Pacific Index added 1.3 percent at 12:06 p.m. in Tokyo. Standard & Poor’s 500 Index futures gained 0.5 percent. Copper increased 0.6 percent and oil advanced 0.4 percent. The Dollar Index snapped a six-day rally and the Aussie jumped 0.8 percent. The Swiss franc was little changed against the euro at 1.2047 after sinking as much as 9.9 percent yesterday. Treasury 10-year yields rose three basis points.

Valuations on MSCI’s Asia Pacific Index fell to 11.7 times estimated profits yesterday, the lowest level since November 2008, amid a sell-off that has wiped out $2.5 trillion from global equity values this month. Data today showed Australia’s economy grew at a faster-than-forecast 1.2 percent last quarter. The Federal Reserve will release its Beige Book survey of the U.S. economy today, while President Barack Obama will address Congress tomorrow on his plan to boost job growth.

“Asia was already quite cheap and after the drop in August, it looks even cheaper,” Wilfred Sit, Asia chief investment officer for Baring Asset Management, said in a Bloomberg Television interview from Hong Kong. “Over the long term, Asia’s fundamentals remain very strong but there’s still a possibility of macro shocks.”
Stocks Rebound

Seven shares advanced for every one that declined on MSCI’s Asia Pacific Index, helping the gauge pare its loss this year to 12 percent. Japan’s Nikkei 225 (NKY) Stock Average rallied 1.4 percent after retreating yesterday to its lowest level since April 2009. South Korea’s Kospi Index jumped 1.9 percent, Taiwan’s Taiex Index added 1.2 percent, while Australia’s S&P/ASX 200 Index climbed 2.1 percent.

Hyundai Motor Co. (005380) rallied 2.1 percent after Chang Kyun Han, president of its European operations, said the company aims to increase its European market share to 3 percent this year from the 2.8 percent it had in the first half by selling more than 400,000 vehicles. Hynix Semiconductor Inc. and Elpida Memory Inc. jumped more than 5.5 percent each, pacing gains among exporters.

S&P 500 futures expiring in September indicate the U.S. stocks gauge may rebound from its three-day, 4.4 percent slump. The index fell as much as 2.9 percent yesterday before closing 0.7 percent lower. A private report showed U.S. services industries grew faster than the median forecast of economists in a Bloomberg survey.
Obama’s Plan

Obama is set to explain his plans in a Sept. 8 address to Congress as unemployment remains at 9.1 percent more than two years after the recession’s official end. Chicago Fed President Charles Evans is scheduled to speak in London today, while Chairman Ben S. Bernanke will speak on the U.S. economic outlook tomorrow in Minneapolis. Treasury 10-year notes fell for the first time in a week, sending yields up to 2.03 percent.

The Dollar Index, which tracks the U.S. currency against those of six trading partners, fell 0.2 percent after climbing 2.9 percent in the previous six sessions amid signs growth in the world’s largest economy is stalling and on concern Europe’s sovereign-debt crisis is worsening. The dollar weakened to $1.4030 per euro from $1.3998 yesterday. It slipped 0.3 percent to 77.41 yen, following a 1 percent jump yesterday.

“The dollar tends to weaken when appetite for risk increases because it’s a currency that’s preferred when people are risk averse,” said Koji Fukaya, chief currency strategist in Tokyo at Credit Suisse Group AG.
Australia’s Growth

The Aussie strengthened after today’s gross domestic product report. The economy was forecast to have expanded 1 percent in the second quarter from the previous three months, according to the median forecast of 25 estimates in a Bloomberg News survey.

The cost of protecting Asia-Pacific corporate and sovereign bonds from default dropped, with the Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan decreasing 4 basis points to 160.5 basis points, Royal Bank of Scotland Group Plc prices show. The index is on course for its first decline since Sept. 1, according to data provider CMA, which is owned by CME Group Inc. and compiles credit-default swap prices quoted by dealers in the privately negotiated market.

The Markit iTraxx Japan index decreased 4 basis points to 151, Deutsche Bank AG prices show, while the Markit iTraxx Australia index declined 3 basis points to 177 basis points, according to Credit Agricole CIB. Both indexes are also headed for the first decline since Sept. 1, CMA prices in New York show.

Copper for three-month delivery rose 0.5 percent to $8,985 a metric ton on the London Metal Exchange, following a four-day, 3.7 percent loss. Nickel climbed 1.8 percent, also gaining for the first time in five days.

Crude gained 0.4 percent to $86.33 in New York, rebounding from the lowest level in more than a week. October futures had dropped 3.2 percent in the previous two day.

To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net
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