en Weakens to June 2009 Low as China Stocks Decline With Won

By Glenys Sim

The yen dropped to the lowest since June 2009 and the Nikkei 225 Stock Average approached a 4 1/2- year high after the Bank of Japan (8301)’s unprecedented stimulus measures last week. Chinese shares declined with the won, while natural gas and wheat rose.

The yen sank 1 percent to 98.54 per dollar as of 12:52 p.m. in Tokyo after earlier touching 98.85. The Nikkei 225 jumped 2.5 percent and the Shanghai Composite Index fell 0.7 percent. The MSCI Asia Pacific Index advanced 0.2 percent while Standard & Poor’s 500 Index futures added 0.1 percent and FTSE 100 Index contracts climbed 0.5 percent. South Korea’s currency slid to the weakest level in more than eight months. Natural gas gained 0.9 percent and wheat advanced 1 percent. Bond risk in Japan dropped and Australian government bonds rose. Japan’s Nikkei 225 Index has risen 6.4 percent and the yen has declined 5.6 percent since the Bank of Japan said April 4 it would double bond buying to reach its target of 2 percent annual inflation within two years. South Korea warned of a North Korean missile test on April 10. China reported three more infections from a bird-flu virus that’s killed six people since March.

“With the currency weakening to the 98 yen per dollar range, exporters’ earnings may come in above expectations” this reporting season, said Norihiro Fujito, a senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo. As avian flu spreads in China, “it’s necessary for us to assess its impact on the Asian stock market.”

Japan Stocks

The yen fell 1 percent to 128.01 per euro after touching 128.44, the weakest since January 2010. Japan rebounded to a current-account surplus in February as a depreciating yen and record monetary stimulus improved the outlook for a revival in the world’s third-biggest economy.

The cost of insuring corporate bonds in Japan against non- payment extended falls to the least in 2 1/2 years, credit- default swap prices show. The Markit iTraxx Japan index declined 4 basis points to 92 basis points, according to Citigroup Inc. prices.

About five stocks rose for every three that fell in the MSCI Asian gauge as concern that the deadly outbreak in China will hurt food manufacturers and airlines offset gains in Japanese exporters. The Nikkei 225 (NKY) headed for its highest close since Aug. 18, 2008. Honda Motor Co., which gets about 80 percent of its sales outside Japan, gained 3.1 percent.

Chinese Shares

China’s CSI 300 Index (SHSZ300) retreated 0.6 percent andTaiwan’s Taiex Index dropped 2.1 percent as markets reopened after a two- day holiday. Shijiazhuang Yiling Pharmaceutical Co. jumped by the 10 percent daily limit in Shenzhen after the company said one of its products was included in the government’s list of drugs for the H7N9 virus.EVA Airways Corp. (2618) fell 6.8 percent in Taiwan on concern the outbreak will hurt travel demand.

Cathay Pacific Airways Ltd. gained 3.4 percent, the most since Aug. 9, after Bank of America Merrill Lynch raised the stock to buy from underperform. The shares slumped 4.1 percent April 5.

The won slid 0.7 percent to 1,139.25 per dollar after touching 1,139.59, the lowest since July, as heightened risk of conflict with North Korea spurred outflows of foreign funds. North Korea warned embassies to evacuate because it won’t be able to guarantee the safety of foreign missions in the event of a conflict.

Australia’s 10-year bond yields decreased nine basis points to 3.23 percent after touching 3.18 percent, the lowest since Dec. 12. Signs of a slowing U.S. economy are boosting demand for the safety of government debt.

Alcoa Earns

S&P futures rose, indicating the gauge will rebound after retreating April 5, capping its biggest weekly drop of the year as U.S. jobs data missed estimates. Alcoa Inc. (AA) is due to kick off the first-quarter earnings-reporting season in the U.S. today. Income at S&P 500 companies decreased 1.8 percent in the first three months of the year, according to analyst estimates compiled by Bloomberg. That would mark the first year-over-year decrease in profit since 2009.

Wheat rose for a second day to $7.05 a bushel after China’s state-owned researcher Grain.gov.cn reported today that the nation bought as many as 16 cargoes of U.S. wheat April 4. Prices have plunged as much as 30 percent from a four-year high in July.

Natural gas futures in New York climbed to $4.160 per million British thermal units. Prices have advanced 24 percent this year and the commodity is top performer in the S&P’s GSCI Index of 24 raw materials. Unusually cold weather in March bolstered heating demand and reduced stockpiles.

Copper in London gained after falling for three consecutive weeks as data showed orders to remove the metal from warehouses rose to the highest level in more than 15 years. The metal for delivery in three months increased 0.8 percent to $7,467.50 a metric ton.

To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net

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