Asia Stocks, Won Gain on U.S. Economic Outlook

Asian stocks rose for a third day, while U.S. futures and the South Korean won climbed, after Federal Reserve Chairman Ben S. Bernanke said the world’s biggest economy is gradually recovering and he has the tools to spur growth. Gold and the Swiss franc fell.

The MSCI Asia Pacific Index added 1.8 percent as of 12:44 p.m. in Tokyo. Standard & Poor’s 500 Index futures increased 0.9 percent, while Treasury 10-year notes declined for the first time in three days. The won strengthened 0.6 percent versus the dollar, while the franc lost 0.4 percent. Gold for immediate delivery sank as much as 1.2 percent. Gasoline prices slid as refineries along the U.S. East Cost operated at or near normal levels following Tropical Storm Irene.

Raw material suppliers and exporters led gains in Asia after Bernanke said on Aug. 26 in Jackson Hole, Wyoming, the U.S. economy isn’t deteriorating enough to warrant any immediate stimulus.

Stocks Gain

Australia’s S&P/ASX 200 Index rallied 1.6 percent, South Korea’s Kospi Index jumped 2.7 percent and Taiwan’s Taiex Index increased 2 percent. The Nikkei 225 Stock Average was 1.4 percent higher before Japan’s ruling party today chooses Naoto Kan’s successor as prime minister.

Inotera Memories Inc. (3474) advanced by the 7 percent daily limit in Taipei after a two-day surge in the price of memory chips. Hyundai Merchant Marine Co. rose 3.6 percent in Seoul after Daewoo Shipbuilding & Marine Engineering Co. signed an agreement with Hyundai Elevator Co. to buy Hyundai Merchant shares.

The Shanghai Composite Index dropped 1.1 percent, paced by a retreat in Industrial and Commercial Bank of China Ltd., after economists from brokerages including Bank of America Corp.’s Merrill Lynch unit and Mizuho Securities Asia Ltd. said banks have been ordered to set aside reserves on a broader range of deposits. China’s one-year swap rate, the fixed cost of receive the seven-day repurchase rate, rose 19.5 basis points to 4.265 percent, the highest level since July 22.

Fed Meeting

S&P 500 index (SPX) futures signal the gauge may extend its 1.5 percent rally on Aug. 26. The index increased 4.7 percent last week, its first gain in more than a month. Stocks initially fell on Aug. 26 after Bernanke announced no new plan to stimulate growth.

He said a second day has been added to the next Federal Open Market Committee meeting in September to “allow a fuller discussion” of the economy and the Fed’s possible response. He didn’t close the door in today’s speech to options he has previously discussed, including a third round of government bond buying.


U.S. Economy 

Data today may show personal spending rose 0.5 percent in July, following a 0.2 percent decrease the previous month, according to the median forecast of economists surveyed by Bloomberg. Separate reports today may show pending home sales increased 13.6 percent in July, after a 17.3 percent gain previously, while the Dallas Fed’s index of manufacturing activity declined 8.5 percent in August.
Treasuries fell for the first time in three days, sending yields on 10-year notes up two basis points to 2.21 percent.

The won climbed to 1,075.35 per dollar, while Malaysia’s ringgit strengthened 0.3 percent to 2.9795 per dollar, the biggest increase in a week. The Swiss franc weakened against all 16 most-actively traded peers and traded at 80.99 centimes against the U.S. currency.

“Market players are interpreting Bernanke’s speech in an optimistic way, weighing possibilities for another stimulus in the near future,” said Ryoo Hyun Jung, chief currency dealer with Citibank Inc. in Seoul. “The speech has shifted sentiment from risk-averse to some risk-taking.”

The cost of protecting Asia-Pacific corporate and sovereign bonds from default declined, with the Markit iTraxx Australia index dropping three basis points to 171 basis points, according to Credit Agricole CIB prices. That will be its lowest level since Aug. 25, according to data provider CMA.

Gold, Gasoline

Immediate-delivery gold lost as much as 1.2 percent to $1,806.50 an ounce before trading at $1,822. The metal has slumped as much as 11 percent from its Aug. 23 all-time high of $1,913.50 as equities rebounded. December-delivery bullion in New York rose 1.5 percent to $1,824.20 an ounce, after gaining 2.5 percent earlier.

Oil for October delivery traded little changed at $85.38 a barrel on the New York Mercantile Exchange, following two days of gains. Gasoline for September delivery dropped as much as 2 percent today to $2.8765 a gallon in electronic trading on the New York Mercantile Exchange, extending a 1.1 percent drop on Aug. 26. Irene weakened from a hurricane and headed toward Canada.

Dry Weather

Corn and soybeans gained on concern that dry weather in the U.S. Midwest will erode crop yields. December-delivery corn rose 0.9 percent to $7.74 a bushel, extending Friday’s 3.2 percent advance, the biggest increase since Aug. 11. Soybeans for November delivery climbed 0.3 percent to $14.2775 a bushel.

U.S. farmers may harvest 12.484 billion bushels of corn this year, the Professional Farmers of America newsletter said Aug. 26 after completing a four-day tour of Midwest fields. The estimate was 3.3 percent below the U.S. Department of Agriculture’s forecast. Iowa and Illinois, the biggest growers of corn and soybeans, had the hottest July since 1955, and rainfall has been below normal this month.(Bloomberg)