Copper Jumps on Earthquake; Asia Stocks, Oil Gain on U.S. GDP
Copper jumped the most in 11 months after an earthquake in Chile cut production in the world’s biggest producer. Stocks rose, oil climbed above $80 a barrel and currencies of commodities producers strengthened.
The May-delivery copper contract gained as much as 20.3 cents, or 6.2 percent, to $3.4870 a pound at 12:20 p.m. in Tokyo, the largest intraday gain for the most-active futures since April. The MSCI Asia Pacific Index of shares added 0.7 percent to 118.92 as stock benchmarks advanced across the region. The Australian dollar appreciated 0.6 percent to 89.67 U.S. cents and the New Zealand dollar firmed 0.4 percent to 69.76.
Chile’s 8.8 magnitude earthquake struck Feb. 27, disrupting mines a day after the U.S. raised its fourth-quarter economic growth estimate to a six-year high of 5.9 percent. In China, the world’s biggest copper user, Premier Wen Jiabao said policy makers need to strike a balance between maintaining “stable and relatively fast” growth and managing inflation. The yen fell versus the euro as speculation European governments will rescue debt-laden Greece cooled demand for safe-haven investments.
“Risk money is flowing into commodities such as crude oil and nonferrous metals after the earthquake,” said Yoshihiro Ito, a senior strategist at Tokyo-based Okasan Asset Management Co., which oversees about $8.2 billion.
Codelco, the world’s largest copper producer, said it will meet supply contracts after power cuts caused by the temblor forced the company and rivals such as Anglo American Plc to halt mine operations. The company resumed operations at its 381,000 ton-a-year El Teniente underground mine in central Chile and said it may restart production “in the coming hours” at its 219,554 ton-a-year Andina mine.
All 10 industry groups in the MSCI Asia Pacific Index advanced, paced by raw-materials producers. Jiangxi Copper Co., China’s biggest maker of the metal, climbed 5.5 percent to HK$16.64 and Rio Tinto Group, the world’s third-biggest mining company, rose 0.9 percent to A$71.11. PetroChina Co., the biggest oil company by market value, gained 2 percent to HK$8.84.
Mitsubishi UFJ Financial Group Inc., Japan’s largest bank by market value, climbed 2.5 percent to 460 yen after JPMorgan Chase & Co. boosted its recommendation to “overweight” from “neutral.” Toll Holdings Ltd., Australia’s largest trucking and freight company, surged 7.1 percent to A$7.28 after a report showed the nation’s manufacturing expanded at the fastest pace in two years.
The yen slipped against higher-yielding currencies including the Australian dollar after French Finance Minister Christine Lagarde said European governments are studying ways to assist Greece. Benchmark interest rates are 0.1 percent in Japan and 3.75 percent in Australia.
A rescue package for Greece “will reduce the drag on the euro,” said Akio Yoshino, chief economist in Tokyo at Societe Generale Asset Management (Japan) Inc. “This will then weaken demand for safe-haven currencies such as the yen.”
The yen was at 121.30 per euro in Tokyo from 121.26 in New York on Feb. 26, when it slipped 0.5 percent. Versus the Australian dollar, it traded 0.4 percent weaker at 79.97. The euro rose for a fourth day against the pound, adding 0.3 percent to 89.73 pence.
The cost of protecting Australian and Japanese bonds from default fell to the lowest level in at least four weeks, according to traders of credit-default swaps. The Markit iTraxx Australia index fell 8.5 basis points to 89.5 in Hong Kong, according to Citigroup Inc. That’s the lowest since Jan. 21, CMA DataVision prices in New York show. The Markit iTraxx Japan index lost 4.5 basis points to 140.5 in Tokyo, the lowest level since Jan. 28, Morgan Stanley and CMA prices show.
The swap contracts pay the buyer face value in exchange for the underlying securities if a borrower fails meet its debt agreements. A basis point is 0.01 percentage point.