Asian Stocks Advance on U.S. Home Sales Data, Commodities Gain

By Will McSheehy and Shani Raja
Feb. 3 (Bloomberg) -- Asian stocks rose for a second day and commodity prices advanced after a report showed U.S. pending home sales increased, spurring confidence in the recovery of the world’s biggest economy.
The MSCI Asia Pacific Index jumped 1.2 percent to 118.97 as of 5 p.m. in Tokyo, taking its advance in the past two days to 2 percent. Futures on the Standard & Poor’s 500 Index rose 0.2 percent. The Dow Jones Stoxx 600 gained 0.2 percent to 251.30 at
8 a.m. in London. Copper for three-month delivery advanced for a third day, gaining 0.8 percent to $6,872 a metric ton. Aluminum added 0.7 percent to $2,134 a ton.
"We’re getting more and more confirmation the cyclical recovery is on track," said Nader Naeimi, a Sydney-based strategist at AMP Capital Investors, which oversees $90 billion.
"The fundamentals continue to be supportive."
Stocks rose after the National Association of Realtors said pending home sales rose 1 percent following a 16 percent drop in November. A nine-quarter earnings slump for S&P 500 companies is projected to have ended in the final three months of 2009, and almost 81 percent of earnings published since Jan. 11 topped the average of Wall Street estimates, according to data compiled by Bloomberg. Chinese shares climbed after National Bureau of Statistics Chief Economist Yao Jinyuan said China’s economic growth won’t fall below 8 percent this year, according to a Shanghai Securities News report today.

Housing Stocks

Seven stocks advanced on the MSCI Asia Pacific Index for every two that declined. The Hang Seng Index climbed 1.3 percent.
The Shanghai Composite Index advanced 1.8 percent. The Bombay Stock Exchange’s Sensitive Index, or Sensex, gained 1.9 percent.
James Hardie Industries NV, the biggest seller of home siding in the U.S., jumped 3.8 percent to A$7.96, while Boral Ltd., a building materials company that gets 11 percent of its sales in the U.S., advanced 4.5 percent to A$5.60. Both stocks were upgraded to "buy" from "neutral" by UBS AG.
"The U.S. housing market is rebounding," said Hiroichi Nishi, an equities manager at Nikko Cordial Securities Inc. in Tokyo. "The economy is definitely recovering. Exporters and commodity related shares will be the focus today."
Nissan Motor Co., which derives more than a third of revenue from North America, gained 1.2 percent after saying vehicle sales in the U.S. rose 16 percent in January. BHP Billiton Ltd., the world’s largest mining company, added 2.6 percent to A$41.50, while Rio Tinto Group, the world’s third- largest mining company, added 1.4 percent to A$72.00.

Alumina Gains

Alumina Ltd. rose 1.5 percent to A$1.66 as Citigroup Inc.
recommended investors buy shares of Alcoa Inc., the largest U.S.
aluminum maker. Alumina operates the Alcoa World Alumina & Chemical venture with Alcoa.
The dollar traded at 90.48 yen from 90.38 yen and was unchanged at $1.395 per euro. The pound advanced against 15 of its 16 major counterparts on prospects the U.K. will curb easing measures as the nation emerges from its worst recession, rising
0.7 percent to 145.03 yen.
"Speculation some Bank of England’s policy makers will show a hawkish view on the outlook for the economy and monetary policy is supporting the pound," said Toshiya Yamauchi, manager of foreign-exchange margin trading at Ueda Harlow in Tokyo.
South Korea’s won rose 0.9 percent to 1,149.25 per dollar on optimism a global economic recovery will boost appetite for emerging-market assets. The extra yield investors demand to own developing-nation dollar debt instead of U.S. Treasuries dropped
8 basis points to 3.01 percentage points, according to JPMorgan Chase & Co.’s EMBI+ Index.

Wrong Pricing

Investors have wrongly priced in an "orderly" withdrawal of stimulus measures, a rebound in bank lending and coordinated government policy to restore growth, Mohamed A. El-Erian, chief executive officer of Pacific Investment Management Co., wrote in a Bloomberg News column. That means Wall Street projections for equity gains in 2010 may prove incorrect, he said.
The 13 Wall Street strategists tracked by Bloomberg News project that the S&P 500 will rise 10 percent to 1,232 through Dec. 31, according to the average estimate.
Oil pared some of yesterday’s 3.8 percent gain, dropping to
$77.21 a barrel in electronic trading after an industry report showed a larger-than-expected increase in crude stockpiles in the U.S., the world’s biggest energy consumer. Oil declined for the first day in three after the American Petroleum Institute reported crude inventories rose 4.72 million barrels last week.