Draghi Seen Easing Policy by June as ECB Readies Rate Cut

Bloomberg: Shares in Hong Kong and Shanghai surged as permission for a link between the two bourses overshadowed a surprise drop inChina’s trade figures that spurred losses in emerging-market currencies. European index futures rose.

The Hang Seng Index jumped 1 percent by 7:41 a.m. in London, heading for the highest close since Jan. 17 after dropping as much as 0.5 percent after China’s March exports and imports data missed estimates. The yuan slipped 0.2 percent in offshore trading as Turkey’s lira weakened 0.4 percent. Futures on the Euro Stoxx 50 Index added 0.4 percent after the Federal Reserve eased concern about U.S. rate rises, while contracts on the Standard & Poor’s 500 Index (SPX) were little changed. Indonesian equities plunged and the rupiah weakened after elections failed to show a clear winner.

China will allow limited cross-border trading between its two biggest equity venues, further boosting efforts to open the country’s capital markets, Premier Li Keqiang said today. Exports from Asia’s biggest economy fell 6.6 percent in March, extending the steepest drop since 2009 in February and missing the estimate for a 4.8 percent gain from a Bloomberg survey of economists. Fed minutes played down forecasts for rates to increase faster than previously projected.

The Hang Seng Index climbed amid volume that was 58 percent above the 30-day average. A gauge of Chinese shares in the city advanced 0.7 percent, a sixth day of gains. The Shanghai Composite Index jumped 1.5 percent.

“The quota will have a significant impact on the Hong Kong market because it accounts for about a quarter or fifth of the daily turnover,” said Sam Chi Yung, a strategist at Delta Asia Securities Ltd. “The quota amount is a starting point,” and may be increased.

Imports Plunge

China’s imports plunged 11.3 percent last month down from growth of 10.1 percent in February and below the survey forecast for a 3.9 percent expansion. China’s export data have been distorted by inflated numbers in early 2013, when some companies filed fake invoices to disguise capital inflows.

“The data is fueling concerns about the emerging market economies,” said Ayako Sera, a Tokyo-based market strategist at Sumitomo Mitsui Trust Bank Ltd., which manages the equivalent of $474 billion. “March should be free from distortion from Lunar New Year, and the fact that imports dropped this much implies huge impact on the global economy.”

China’s yuan slipped 0.2 percent in offshore trading. The Beijing leadership, under pressure to preserve growth in Asia’s largest economy, last week outlined an aid package that included spending on railways and tax breaks.

Yen Advances

Japan’s Topix was little changed after jumping as much as 1.5 percent earlier. The yen strengthened 0.3 percent, erasing yesterday’s decline and denting the prospects for exporters. Toyota Motor Corp., Japan’s largest listed company, retreated 2.4 percent, a sixth straight decline amid the stronger yen and a day after announcing a global recall of more than 6 million vehicles.

Russia’s ruble climbed 0.3 percent to 35.535 versus the dollar and was little changed at 49.1743 against the euro. The Micex Index climbed 0.6 percent in Moscow.

U.S. Defense Secretary Chuck Hagel said today that Russian troops on the border with Ukraine are “dangerous” and heighten tensions. Russian President Vladimir Putin told his government to develop plans to replace imports from Ukraine and said Russia can’t subsidize its neighbor permanently, increasing economic pressure as the government in Kiev battles separatists.

Nickel Rally

Nickel rose to $16,917 a ton and extended gains to a ninth straight day, the metal’s longest winning streak since October 2010, on concern that tensions in Ukraine may escalate amid a continuing ban on some ore exports from Indonesia.

Indonesia’s Jakarta Composite Index plunged 3.4 percent while the rupiah, the best-performing Asian currency this year, slipped 0.5 percent after parliamentary elections. Joko Widodo, leader of the Indonesian Democratic Party of Struggle, or PDI-P, took 19.7 percent of the vote in parliamentary elections held yesterday, based on an unofficial tally compiled by Lingkaran Survei Indonesia. That’s below the threshold required for a presidential candidate to stand alone.

reporters on this story: Nick Gentle in Hong Kong