The euro climbed to a three-week high versus the dollar, while Asian stocks and U.S. equity-index futures rose on speculation European nations will pledge more funds to repair Greece’s finances. Wheat sank the most in three weeks after Russia said it will allow grain shipments to resume.
Europe’s 17-nation currency strengthened 0.7 percent to $1.4382 at 3 p.m. in Tokyo. The yen dropped against all 16 major peers after Moody’s Investors Service placed Japan’s sovereign rating on review for a downgrade. The MSCI Asia Pacific Index increased 1.3 percent, paring its biggest monthly loss in a year. Futures on the Standard & Poor’s 500 Index added 0.7 percent, while those on the Euro Stoxx 50 Index rose 1 percent. Wheat tumbled as much as 4.4 percent. Crude oil gained 0.5 percent.
European Union leaders will decide on a new aid package for Greece by the end of next month, said Luxembourg’s Jean-Claude Juncker, who leads the group of euro-area finance ministers. Economic reports today showed a leading index for China, the world’s second-largest economy, climbed to a six-month high while India’s gross domestic product and industrial production in Japan and South Korea grew less than economists predicted.
“There’s a degree of confidence that cooler heads will prevail and the next round of assistance will be forthcoming” for Greece, said Robert Rennie, chief currency strategist in Sydney at Westpac Banking Corp.
The euro appreciated against 13 of its 16 most-actively traded counterparts. It slid against all but two yesterday after Antonis Samaras, leader of Greece’s biggest opposition party, New Democracy, rejected Prime Minister George Papandreou Papandreou’s new austerity measures. The package includes an additional 6 billion euros ($8.6 billion) of budget cuts and a plan to speed 50 billion euros of state-asset sales.
EU officials have ruled out a “total restructuring” of the nation’s debt, Juncker said yesterday. Germany may stop demanding an early rescheduling of bonds for Greece so the debt- strapped nation can get a new package of loans, the Wall Street Journal reported, citing unidentified people. German Chancellor Angela Merkel is scheduled to visit India today.
Discussions of additional aid for Greece “will help lift market sentiment but they still need to sort out how they are going to address the issue,” said Diane Lin, a Sydney-based fund manager at Pengana Capital Ltd., which has about $1 billion of assets. “Europe’s situation is still very difficult.”
New Zealand’s dollar rose as much as 1.2 percent to 82.64 U.S. cents, its highest level since exchange-rate controls ended in 1985, after a report showed the nation’s business confidence increased. Malaysia’s ringgit rose 0.4 percent to 3.0070 per dollar on speculation the central bank will raise interest rates or tolerate currency gains to help damp inflation after the government approved an increase in electricity prices.
China, South Korea
China’s leading index, a gauge of growth in Asia’s biggest economy, climbed to 102.11 in April from 101.76 the previous month. That’s the strongest level since October. South Korea’s output climbed 6.9 percent from a year earlier in April, the least in seven months, the statistical office said. India’s gross domestic product expanded 7.8 percent in the three months ended March 31 from a year earlier, less than the 8.1 percent median forecast in a Bloomberg survey of economists.
The yen fell 1.3 percent to 117.09 per euro and weakened 0.6 percent to 81.42 against the dollar after Moody’s placed Japan’s Aa2 sovereign debt grade on review for a downgrade, citing concerns over “faltering economic growth prospects and a weak policy response.”
Japan, U.S. Economy
The nation’s factory output rose 1 percent in April from March, when it recorded a record drop, the Trade Ministry said in Tokyo today. Economists forecast a 2 percent gain, a Bloomberg survey showed. The jobless rate advanced to 4.7 percent from 4.6 percent as payrolls fell, according to a separate report.
The Dollar Index dropped for a fourth day, sliding 0.4 percent, as Republican and Democrat leaders struggled to negotiate an agreement to raise the U.S.’s $14.3 trillion debt ceiling. Yields on 10-year Treasuries were little changed at 3.09 percent before data this week forecast to show the increase in U.S. payrolls this month slowed from April and the Institute for Supply Management’s factory index likely fell to the lowest level since October.
Futures on the S&P 500 indicate shares may extend a three- day rally when markets resume trading today after yesterday’s Memorial Day holiday. The gauge dropped in each of the last four weeks, the longest losing streak since February 2010.
Five shares advanced for every one that declined on MSCI’s Asia Pacific Index, helping the gauge pare its loss this month to 2.4 percent. That’s still the steepest monthly drop since May 2010, when the gauge tumbled 9.8 percent. Japan’s Nikkei 225 Stock Average rallied 2 percent and South Korea’s Kospi index jumped 2.3 percent.
OCI Co. and GCL-Poly Energy Holdings Ltd. (3800) rose more than 5.8 percent each, leading gains among renewable-energy companies, after Merkel’s coalition endorsed yesterday a plan to close all of Germany’s atomic-power plants by 2022. Tenaga Nasional Bhd. (TNB), Malaysia’s biggest power producer, added 8.6 percent after it won government approval to raise charges by an average 7.1 percent starting tomorrow. Hyundai Heavy Industries Co. surged 11 percent after it received an order for two liquefied natural gas carriers from Dynagas Ltd. of Greece.
Tokyo Electric Power Co., operator of the damaged Fukushima nuclear plant, dropped 2.8 percent after its corporate credit ratings were cut to junk status by Standard & Poor’s Ratings Services. Credit-default swaps on Tepco, as the company is known, jumped 200 basis points to 900 basis points, according to Citigroup Inc. prices.
The Markit iTraxx Japan index of credit-default swaps increased three basis points to 126 basis points, according to Citigroup. The index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, is in course for its highest close since April 20, CMA prices show.
Oil for July delivery rose 0.5 percent to $101.09 a barrel in New York after a pump-station leak forced the shutdown of the Keystone pipeline that carries crude to the largest U.S. storage hub. U.S. floor trading was closed yesterday and electronic trades will be booked with today’s transactions for settlement purposes. Brent crude oil gained 0.1 percent to $115.13 a barrel.
Copper futures dropped 0.9 percent to $4.148 a pound on the Comex in New York. Three-month delivery copper slid 0.7 percent $9,138.50 a metric ton on the London Metal Exchange, which was also shut yesterday for a holiday.
Wheat fell 2.2 percent to $8.0175 a bushel in electronic trading on the Chicago Board of Trade after Russia, once the second-largest exporter, said it will allow grain shipments to resume July 1, easing global supply concerns.