By Adam Haigh Apr 17, 2014 8:34 AM GMT+0800

Asian stocks rose for a second day after U.S. industrial production increased more than forecast in March and Federal Reserve Chair Janet Yellen said the central bank remains committed to supporting the economic recovery.

GungHo Online Entertainment Inc. (3765) surged 17 percent in Tokyo after the Internet games maker said six of its titles are generating profit. Canon Inc. gained 2.2 percent after the Nikkei reported earnings in the March quarter increased about 50 percent. Santos Ltd. sank 1.5 percent in Sydney as first-quarter sales at the oil and natural gas explorer missed estimates.

The MSCI Asia Pacific Index gained 0.3 percent to 138.44 as of 9:30 a.m. in Tokyo, before markets open in Hong Kong and China. All 10 industry groups advanced. American industrial production climbed last month after a February gain that was twice as big as previously estimated.

&ldquo The global economic cycle is gradually improving and monetary conditions are easy,&rdquo said Shane Oliver, who helps oversee about $130 billion as Sydney-based head of investment strategy at AMP Capital Investors Ltd. &ldquo The trend in share markets is likely to remain up.&rdquo

Japan&rsquo s Topix index swing between gains and losses as the yen rose following four days of declines. South Korea&rsquo s Kospi index gained 0.3 percent and Australia&rsquo s S& P/ASX 200 Index added 0.5 percent. New Zealand&rsquo s NZX 50 Index climbed 0.1 percent.

The MSCI Asia Pacific Index traded yesterday at 12.6 times estimated earnings compared with 15.9 for the Standard & Poor&rsquo s 500 Index and 14.5 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Fed Support

The Fed has a &ldquo continuing commitment&rdquo to support the recovery even as policy makers now see the economy reaching full employment by late 2016, Yellen told the Economic Club of New York yesterday. Investors should pay attention to shortfalls in both inflation and the jobless rate for signals on the Federal Open Market Committee&rsquo s decisions on the policy rate, she said.

Fed policy makers are unwinding the bond-buying program they have used to support the economy, while keeping their target for overnight lending between banks in a range of zero to 0.25 percent since 2008.

The U.S. economy continued to expand in most regions as businesses benefited from a rebound from harsh winter weather earlier in the year. Eight of 12 Fed districts characterized growth as &ldquo modest or moderate,&rdquo the Fed said in its Beige Book business survey, based on reports gathered before April 7.

Futures on the S& P 500 slid 0.2 percent today after the equities gauge yesterday capped its best three-day rally in two months on optimism over corporate earnings and the strength of the world&rsquo s largest economy.

Futures on Hong Kong&rsquo s Hang Seng Index added 0.1 percent and contracts on the Hang Seng China Enterprises of mainland Chinese firms listed in the city climbed 0.5 percent in most recent trading.

The Bloomberg China-U.S. Equity Index gained 1.2 percent in New York yesterday after Alibaba Group Holding Ltd., China&rsquo s largest e-commerce platform, posted a surge in quarterly earnings that underscored the growth prospects of Internet companies.

 

By Bloomberg News Apr 15, 2014 3:40 PM GMT+0800

China&rsquo s loss of economic momentum in the first quarter was deeper than the most widely-cited data will show, according to analyst forecasts for a gauge that&rsquo s gaining increasing recognition.

Gross domestic product grew a seasonally adjusted 1.5 percent from the previous three months, according to the median estimate in a Bloomberg News survey ahead of data released tomorrow, down from 1.8 percent in the fourth quarter. That indicates a sharper deceleration than a median projection for 7.3 percent growth from a year earlier, from 7.7 percent.

Investors are focused on the scale of a slowdown that prompted Premier Li Keqiang to provide what some analysts dubbed a &ldquo mini-stimulus&rdquo of spending and tax relief. While the indicator suffers from flaws including the government&rsquo s failure to give details of methodology, it provides an extra tool to analyze an economy that bond-fund manager Bill Gross calls the &ldquo mystery meat&rdquo of emerging markets.

&ldquo The quarter-on-quarter data will show growth momentum has actually bottomed out in the first quarter,&rdquo said Chen Xingdong, Beijing-based chief China economist at BNP Paribas SA, who previously worked at the World Bank. The measure &ldquo has clearly captured the changes in growth momentum,&rdquo Chen said.

Data today from the People&rsquo s Bank of China showed the nation&rsquo s broadest measure of new credit fell 19 percent from a year earlier and money supply grew at the slowest pace on record, underscoring risks of a deeper slowdown as the government tries to curb financial dangers. The Shanghai Composite Index of stocks fell 1.4 percent.

Growth Concerns

While yuan forwards declined yesterday to the lowest level in eight months on concern growth is faltering, economists are picking a rebound this quarter, forecasting quarter-on-quarter expansion of 1.8 percent, according to a separate Bloomberg monthly survey in March. The State Council on April 2 outlined spending on railways and housing, along with tax relief, with annual expansion at risk of missing the 7.5 percent goal.

Bloomberg&rsquo s survey of estimates for the first quarter-on-quarter GDP data in 2011 garnered only one forecast, from Goldman Sachs Group Inc. In contrast, the latest poll had 17.

&ldquo More and more private-sector economists are giving estimates and paying attention to it,&rdquo said Andrew Polk, an economist in Beijing with The Conference Board, a New York-based research group.

At the same time, the indicator has limitations, Polk said. While most countries revise GDP numbers as more information becomes available, the National Bureau of Statistics does so without disclosing why or how, he said.

Lu Ting, head of Greater China economics at Bank of America Corp. in Hong Kong, said &ldquo frequent major revisions&rdquo and seasonal-adjustment difficulties curtail the data&rsquo s reliability.

Extra Tool

Still, amid a range of concerns about Chinese numbers -- from inflated trade figures in 2013 to provincial GDP totals that add up to more than the national tally -- the extra gauge is another tool for &ldquo measuring the dynamism in the economy,&rdquo said BNP&rsquo s Chen.

International companies are still betting on China for growth. Hennes & Mauritz AB, Europe&rsquo s second-biggest clothing retailer, is expanding into the nation&rsquo s smaller cities and Daimler AG said this month that the maker of Mercedes-Benz cars will add 100 dealerships for a network of 400 outlets in the nation by the end of this year.

Financial Strains

The outlook may partly depend on how officials cope with financial strains after the onshore yuan bond market had its first default, by Shanghai Chaori Solar Energy Science & Technology Co.

China has yet to give annualized figures for sequential quarterly growth, which would result in figures that are more volatile than year-on-year numbers. Data compiled by Bloomberg based on the government&rsquo s figures showed annualized growth last year of 6.1 percent in the first quarter, followed by 7.4 percent, 9.1 percent and 7.4 percent.

&ldquo It looks much less attractive for the government than year-on-year, which is stable and almost always above 7.5 percent,&rdquo said Tom Orlik, a Beijing-based economist with Bloomberg LP and author of the 2011 book &ldquo Understanding China&rsquo s Economic Indicators.&rdquo

 

By Weiyi Lim Apr 16, 2014 10:10 AM GMT+0800

Chinese stocks maintained gains, led by financial companies, after the release of data from gross domestic product to industrial output.

By Nick Gentle and Callie Bost Apr 16, 2014 8:21 AM GMT+0800

Asian stocks climbed, with Japan&rsquo s Topix index heading for its biggest advance this month, after U.S. equities rallied on earnings. The currencies of Australia, New Zealand and Malaysia weakened before economic-growth data from China, the countries&rsquo biggest trading partner.

The MSCI Asia Pacific Index climbed 0.4 percent as of 9:20 a.m. Tokyo time, led by a 1.4 percent gain in the Topix. Standard & Poor&rsquo s 500 Index futures were little changed after the benchmark gauge rose 0.7 percent yesterday. New Zealand&rsquo s dollar, the best-performing major currency versus the greenback in the first quarter, weakened 0.5 percent while the ringgit slipped 0.2 percent. Australian bonds followed U.S. Treasuries higher amid increasing tensions in Ukraine.

China&rsquo s loss of economic momentum in the first quarter was deeper than the most widely cited data will show, according to analyst forecasts before data on growth and industrial production released today. Ukraine unleashed an offensive to dislodge militants from towns in its eastern Donetsk region as Russia&rsquo s prime minister said the country risks civil war. The Nasdaq Composite Index finished higher, erasing a drop of 1.9 percent before Intel Corp. (INTC) beat earnings estimates and forecast better-than-projected second-quarter sales.

&ldquo China is decelerating but in the near term crisis is unlikely,&rdquo said Dariusz Kowalczyk, Hong Kong-based strategist at Credit Agricole CIB said. &ldquo They can control the situation because the government is cash rich and the risk of a major downturn is very containable. We are fairly confident that there&rsquo s enough time for China to revive growth by the end of the year and they will reach their target,&rdquo he said in a Bloomberg TV interview.

China GDP

China&rsquo s gross domestic product grew 1.5 percent from the previous three months, according to the median estimate in a Bloomberg News survey ahead of data released today, down from 1.8 percent in the fourth quarter. That indicates a sharper deceleration than the median projection for 7.3 percent growth from a year earlier, down from 7.7 percent.

Investors are focused on the scale of a slowdown that prompted Premier Li Keqiang to provide what some analysts dubbed a &ldquo mini-stimulus&rdquo of spending and tax relief. The report comes after data yesterday showed China&rsquo s money supply grew at the slowest pace on record and the broadest measure of credit fell 19 percent from a year earlier in March.

Aggregate financing was 2.07 trillion yuan ($333 billion) in March, the People&rsquo s Bank of China said, down from 2.55 trillion yuan a year ago. M2, China&rsquo s broadest gauge of money supply, rose 12.1 percent from a year earlier, compared with the 13 percent median estimate of analysts in a Bloomberg News survey and 13.3 percent in February.

Stocks Gain

About eight stocks rose for each that fell in early trading on the Asia-Pacific gauge. The Topix is heading for its first back-to-back gain since April 3 and the largest advance since March 31. Australia&rsquo s S& P/ASX 200 Index rose 0.3 percent and South Korea&rsquo s Kospi index was 0.1 percent higher.

The Hang Seng China Enterprises Index of Chinese shares in Hong Kong dropped 2.1 percent yesterday, while the Shanghai Composite Index (SHCOMP) lost 1.4 percent, the biggest decline in a month. Futures on the Hong Kong H-share index retreated 0.3 percent in the most recent session, while contracts on the Hang Seng Index dropped 0.4 percent.

The yen slipped 0.2 percent amid speculation Japan may be moving closer to starting another round of economic stimulus. The currency briefly erased gains versus the dollar after Nikkei said the government will downgrade its economic assessment in a report this week.

Tech Rebound

The Nasdaq Composite fell to within four points of its 200-day moving average of 3,942.50 yesterday before reversing. The last time the gauge dropped below that level, considered an important threshold by technical analysts, was Dec. 31, 2012. That&rsquo s the fourth-longest streak in the gauge&rsquo s 43-year history, according to Bespoke Investment Group LLC. The index rose 88 points from its low to the close, the biggest recovery since December, data compiled by Bloomberg show.

The Nasdaq, along with other benchmark indexes, fell through 10-day through 100-day averages last week.

The S& P 500 (SPX) has dropped 2.5 percent from its April 2 record and posted its worst weekly loss since 2012 as selling from Internet and biotechnology stocks, the best performers in a five-year rally, spread to the broader market. The Nasdaq Composite (CCMP) of technology shares sank 3.1 percent last week, and is down 7.4 percent from its March peak.

Coca-Cola Co. gained 3.7 percent as global volume sales increased. Johnson & Johnson climbed 2.1 percent to a record as the company raised its forecast for the year.

Yahoo, Alibaba

Yahoo! Inc. and Intel advanced in extended trading after reporting quarterly results. Intel climbed 1 percent after earnings topped analyst estimates and the company projected second-quarter sales that may exceed some forecasts. Yahoo jumped 6.3 percent as sales surpassed estimates.

Alibaba Group Holding Ltd., China&rsquo s largest e-commerce company that is 24 percent owned by Yahoo, posted its fifth straight quarterly profit gain on surging sales ahead of a potential U.S. initial public offering.

Profit at S& P 500 companies probably fell 0.9 percent in the first quarter, analysts predict. At the beginning of the year, they had projected a 6.6 percent increase. Sales increased 2.6 percent in the first quarter, the estimates show.

&ldquo You&rsquo re in the process right now, in the short run, of sorting through earnings, as well as geopolitical and economic issues,&rdquo Chad Morganlander, a Florham Park, New Jersey-based portfolio manager for Stifel Nicolaus & Co., which oversees more than $150 billion, said in a phone interview. &ldquo There&rsquo s a tremendous amount of volatility and uncertainty because of concerns over Russia and Ukraine. That&rsquo s going to shift the winds of the market on a minute-by-minute basis.&rdquo

Ukraine Crisis

Emerging-market stocks fell for a third day yesterday. Ukrainian units backed by armored personnel carriers blocked all approaches to the town of Slovyansk, Russia&rsquo s state-run RIA Novosti news service reported, citing an unidentified pro-Russian activist. Two militants were wounded when an airport in Kramatorsk was stormed, forcing the protesters to retreat, according to RIA.

The government in Kiev started the operation after fighting between its forces and pro-Russian separatists turned deadly this week. The U.S. and the European Union also deliberated deepening sanctions against Russia, which they blame for stoking the unrest, as Barack Obama and Russian President Vladimir Putin remained at odds over who was at fault.

 

By Lu Wang and Joseph Ciolli Apr 16, 2014 5:20 AM GMT+0800

U.S. stocks rose a second day, after equities posted the worst week since 2012, as earnings from Coca-Cola Co. and Johnson & Johnson overwhelmed concerns that tensions in Ukraine are worsening.

The Nasdaq Composite Index gained 0.3 percent, erasing an earlier drop of 1.9 percent after nearing its average price in the past 200 days. Coca-Cola gained 3.7 percent as global volume sales increased. Johnson & Johnson climbed 2.1 percent as the company raised its forecast for the year.

The Standard & Poor&rsquo s 500 Index climbed 0.7 percent 1,842.98 at 4 p.m. in New York, reversing a loss of 0.8 percent. The Dow Jones Industrial Average gained 89.32 points, or 0.6 percent, to 16,262.05. About 7.7 billion shares changed hands on U.S. exchanges, 10 percent above the three-month average.

&ldquo Stocks are having meaningful moves in both directions because people are nervous on both sides,&rdquo Michael James, a Los Angeles-based managing director of equity trading at Wedbush Securities Inc., said in a phone interview. &ldquo Subjectivity plays such a pivotal role, and emotions, in what&rsquo s been going on in this market that it&rsquo s hard to pinpoint what causes a turn in the direction.&rdquo

The S& P 500 yesterday briefly erased a 1 percent gain, as technology shares dipped, before closing higher to halt a two-day slide. The index has dropped 2.5 percent from its April 2 record as selling from Internet and biotechnology stocks, the best performers in a five-year rally, spread to the broader market.

Technology Volatility

The Nasdaq Composite today fell to within four points of its 200-day moving average of 3,942.50 before reversing. The last time the gauge dropped below that level, considered an important threshold by technical analysts, was Dec. 31, 2012. The index rose 88 points from its low today to the close, the biggest recovery since December, data compiled by Bloomberg show.

The Nasdaq, along with the S& P 500, Dow and Russell 2000 indexes, fell below 10-day through 100-day averages last week. The Russell index of smaller companies sank through its 200-day average today before reversing to close about 12 points above that level.

The volatility in technology stocks &ldquo adds to investor uneasiness,&rdquo Brian Peery, who helps oversee $4.8 billion for Novato, California-based Hennessy Funds, said in a phone interview. Peery said his firm has taken advantage of the recent selloff to add holdings in industrial companies, such as airlines. &ldquo The market is going to continue to climb the proverbial wall of worry. There is enough good economic news to support the market moving up higher in slower stages.&rdquo

Data Watch

Economic data today showed manufacturing in the New York region grew at a slower pace in April while the cost of living in the U.S. rose more than projected in March as food and rents became more expensive.

Confidence among U.S. homebuilders rose less than forecast in April, as sales and prospective buyer traffic stagnated, showing the residential real estate market struggled to improve after a harsh winter. An S& P index of homebuilders fell 0.6 percent.

&ldquo The discipline is to take long-term views of data and move away from the wiggles of each daily number,&rdquo Stephen Wood, the New York-based chief market strategist at Russell Investments, which oversees more than $259 billion, said by phone. &ldquo The grinding, if reluctant, U.S. economy is still in place and all of this data, in the long-term perspective, confirms that.&rdquo

Investors are also weighing data from China, where a report earlier today indicated the money supply grew less than forecast in March. The government will report tomorrow gross domestic product data for the first quarter in the world&rsquo s second-largest economy.

China GDP

&ldquo China&rsquo s growth data tomorrow may demonstrate a weaker-than-expected economy,&rdquo Ronald Wan, chief China adviser at Asian Capital Holdings Ltd., said by phone from Hong Kong. &ldquo Expectations for large-scale stimulus may not be in place and there could be smaller measures instead.&rdquo

Ukraine unleashed an offensive to dislodge militants from towns in its eastern Donetsk region as the authorities in Kiev said elements of Russian special forces were identified among the anti-government forces. Russia&rsquo s prime minister said the country risks civil war.

&ldquo There&rsquo s a tremendous amount of volatility and uncertainty because of concerns over Russia and Ukraine,&rdquo Chad Morganlander, a Florham Park, New Jersey-based portfolio manager for Stifel Nicolaus & Co., which oversees more than $150 billion, said in a phone interview. &ldquo That&rsquo s going to shift the winds of the market on a minute-by-minute basis. You&rsquo re in the process right now, in the short run, of sorting through earnings, as well as geopolitical and economic issues.&rdquo

Earnings Estimates

Nine S& P 500 members report earnings today. Profit at S& P 500 companies probably fell 0.9 percent in the first quarter, analysts predict. At the beginning of the year, they had projected a 6.6 percent increase. Sales increased 2.6 percent in the first quarter, the estimates show.

Yahoo! Inc. and Intel Corp. advanced in extended trading after reporting results. Yahoo jumped 6.4 percent to $36.39 at 5:17 p.m. in New York as sales surpassed forecasts. The stock also got a boost when Alibaba Group reported a 66 percent jump in revenue. Yahoo owns about 24 percent of the largest Chinese e-commerce company. Intel climbed 2 percent to $27.30 after earnings topped analyst estimates.

The S& P 500 trades at 17 times its members&rsquo reported earnings. While that&rsquo s near its highest valuation in four years, it&rsquo s close to its weekly average since 1937, data compiled by Bloomberg show.

Volatility Gauge

The Chicago Board Options Exchange Volatility Index, a gauge for U.S. stock volatility known as the VIX, fell 3.1 percent to 15.61.

All of the 10 main S& P 500 groups advanced today, with utility and energy stocks rising 1.3 percent to lead the gains.

Coca-Cola rose 3.7 percent to $40.18 as first-quarter profit met analysts&rsquo estimates. Global sales volume rose 2 percent for the quarter, driven by emerging markets.

Chief Executive Officer Muhtar Kent, facing sluggish soft drink sales in the U.S., has implemented a cost-cutting program to boost earnings and is collaborating with Keurig Green Mountain Inc. to compete in at-home soda making.

Johnson & Johnson rose 2.1 percent to $99.20, an all-time high. The world&rsquo s biggest maker of health-care products said first-quarter profit rose 34 percent on demand for the company&rsquo s newest drugs.

J& J, the first of the major health care companies to report earnings this quarter, raised its 2014 forecast to $5.80 to $5.90 a share from $5.75 to $5.85 a share, excluding items.

Twitter Inc. soared 11 percent, the biggest gain since its first day of trading, to $45.52. The microblogging company is buying data-analysis company and longtime partner Gnip Inc. for an undisclosed amount. The deal gives Twitter a bigger share of profits from reselling analytical data. The stock is still 28 percent lower for the year.