Nikkei Futures Rise After U.S. Rally; Gold Holds Decline


Japanese index futures and Australian stocks advanced after better-than-estimated factory data fueled a rebound in U.S. equities, outweighing concern over the impact of new sanctions on Russia. Gold maintained its decline from a six-month high and the yen held its retreat.

Nikkei 225 Stock Average futures rose 0.9 percent in the Osaka pre-market as the S&P/ASX 200 Index (AS51) climbed 0.7 percent by 10:44 a.m. in Sydney. Standard & Poor’s 500 Index futures added 0.1 percent after the gauge climbed 1 percent from a three-week low. Gold was little changed after slipping 1.2 percent yesterday and crude oil dropped. The yen was steady following yesterday’s 0.4 percent drop, while forward contracts on the currencies of Malaysia, Indonesia and India gained.

Data from the Federal Reserve — which starts a two-day meeting on monetary policy today — showed U.S. factory production rose by the most in six months in February as the economy recovers from a severe winter.China reports property prices today, with government officials saying a closely held real-estate developer collapsed with $567 million of debt. Russian stocks and the ruble rallied even as the U.S. and European Union ramped up sanctions after Crimea’s referendum.

“We’ve seen an improvement in industrial production after the cold weather and that’s positive,” Keith Poore, the head of investment strategy at AMP Capital Investors Ltd. in Wellington, which manages about $131 billion, said by phone. “Tapering doesn’t seem to be too much of an issue for investors, who are more concerned on when the Fed will start raising interest rates.”

Tapering Survey

The Fed Open Market Committee will further scale back their stimulatory bond buying program at the meeting, reducing purchases by $10 billion for the third time, according to 54 economists surveyed by Bloomberg March 14-17. Policy makers have signaled they plan to continue tapering at each meeting unless the economic situation weakens markedly.

Nikkei 225 futures were bid at 14,400 by 8:05 a.m. in the pre-market, from 14,270 at the close in Japanyesterday. The Nikkei 225 slipped 0.4 percent to 14,277.67 yesterday, extending last week’s 6.2 percent decline that was the biggest drop among 24 developed markets tracked by Bloomberg. The MSCI Asia Pacific Index lost 0.2 percent yesterday to the lowest close since Feb. 7.

Japan’s currency, regarded as a safe-haven investment, strengthened 1.9 percent versus the greenback last week amid concern over China’s economic slowdown and tensions between Russia and Ukraine. Crimea, a majority Russian-speaking region of Ukraine on the Black Sea, voted March 16 to secede and join Russia in a plebiscite deemed illegal by the U.S. and Europe. It traded at 101.85 per dollar today.

Crimea Recognized

EU foreign ministers agreed to freeze assets and impose visa bans on 21 Russians and Crimeans, while the U.S. put similar sanctions on seven Russian government officials and four Ukrainians, including former PresidentViktor Yanukovych, who was ousted after protests last month. Russian President Vladimir Putin responded by recognizing Crimea as a sovereign state. The ruble gained 0.7 percent versus the dollar yesterday as Moscow’s Micex Index climbed from a four-year low.

Australian stocks rose after falling 0.2 percent yesterday, with the country’s central bank to release minutes of its most recent meeting today. New Zealand’s NZX 50 Index (NZSE50FG) added 0.5 percent in a second day of gains.

Hang Seng Index futures rose 0.6 percent in most recent trading, while contracts on the Hang Seng China Enterprises Index of mainland Chinese stocks listed in Hong Kong gained 0.4 percent. The Bloomberg China-US Equity Index of the most-traded Chinese equities in New York climbed 0.8 percent after sliding the most last week since May 2012.

Evergrande Bonds

Property developer Zhejiang Xingrun Real Estate Co. doesn’t have enough cash to repay creditors that include more than 15 banks, according to Chinese officials who asked not to be named because they aren’t authorized to discuss the matter. The company’s majority shareholder and his son, its legal representative, have been detained and face charges of illegal fundraising, the officials said.

Stocks and bonds of Chinese real-estate companies fell on reports of the developer’s collapse. Yields on dollar-denominated bonds of Evergrande Real Estate Group Ltd., China’s fourth-largest developer by market value, rose to the highest level since August. Shares of E-House China Holdings Ltd., an online real-estate provider, and SouFun Holdings Ltd., the Fengtai, China-based operator of a property web portal, slipped at least 0.4 percent in New York.

Shanghai Chaori Solar Energy Science & Technology Co., a Shanghai-based solar maker, became the first company to default in China’s onshore debt market this month. China’s yuan retreated to an 11-month low versus the dollar yesterday after the central bank doubled the currency’s trading band.

Emerging NDFs

One-month non-deliverable forwards on Malaysia’s ringgit gained 0.2 percent to 3.2782 per dollar today, while similar contracts on the Indonesian rupiah added 0.4 percent to 11,298. One-month NDFs on India’s rupee climbed 0.4 percent to 61.50 a dollar with trading resuming after yesterday’s holiday.

Data from the Fed yesterday showed factory production in the U.S. rose 0.8 percent in February. The increase followed a revised 0.9 percent slump in the prior month that was the biggest since May 2009. The median economist forecast called for a 0.3 percent advance.

The S&P 500 climbed after declining the most since January last week, erasing its 2014 gains. The index is now up 0.6 percent for the year.

Yahoo! Inc. jumped 4 percent in the U.S. session after Chinese e-commerce company Alibaba Group Holding Ltd. began the process to list shares in the U.S. Hertz Global Holdings Inc. added 4.8 percent after a report that the company will spin off its equipment-rentals unit.

Oil, Gas

Ten-year Treasury yields rose four basis points to 2.69 percent in New York after dropping 13 basis points, or 0.13 percentage point, last week, the most in two months, Bloomberg Bond Trader data showed.

Gold traded little changed at $1,366.66 an ounce on the spot market. The precious metal slipped 1.2 percent yesterday after posting a a sixth straight week of gains. Copper futures were little changed at $2.953 a pound on the Comex after rising 0.1 percent yesterday.

West Texas Intermediate crude oil lost 0.1 percent to $98.01 a barrel today. Natural gas futures slipped 0.4 percent in early trading, after gaining 2.5 percent in the U.S. as the unusually cold end to March in the Midwest and East stoked speculation that U.S. stockpiles already at an 11-month low will be further eroded.

The S&P GSCI (SPGSCI) gauge of 24 commodities declined 1.1 percent in New York as corn retreated 1.4 percent and wheat fell 1.9 percent.

Ukraine loaded close to 700,000 metric tons of corn last week, according to Paris-based farm adviser Agritel, which has an office in Kiev. A Chinese feed mill bought more than 50,000 tons of Ukraine corn, a purchasing manager said. Ukraine is the third-biggest exporter of corn and sixth-largest in wheat.

Milk futures in Chicago jumped to a record yesterday as surging U.S. dairy exports deplete domestic supplies. Class III milk futures for March delivery touched an all-time high of $23.61 per 100 pounds.