Asian stocks rose broadly on Wednesday, encouraged by a positive lead from Wall Street, after comments from two Federal Reserve officials suggested the Federal Reserve is unlikely to taper its $85 billion-per-month bond-buying program anytime soon. Investors look forward to a speech from the Fed Chairman Ben Bernanke and the release of FOMC May minutes due out later in the day for clues on the interest rate outlook and exchange rate movements.

Japanese shares extended gains for the fourth straight session, supported by a weakening yen after the Bank of Japan maintained its plan to expand the monetary base aimed at beating deflation. Reaffirming its latest easing measures, the central bank’s policy board said the bank will conduct money market operations so that the monetary base will increase at an annual pace of about JPY 60-70 trillion. The bank also committed to purchase seven-year government bonds so that their amount outstanding will increase at an annual pace of about JPY 50 trillion.

The Nikkei average rose 1.6 percent to 15,627, its highest closing level since December 26, 2007, while the broader Topix index closed 0.4 percent higher. Among exporters, Canon rose 2.4 percent, Kyocera climbed 4.9 percent and Fanuc added 2.7 percent. All Nippon Airways jumped 6.3 percent and Japan Airlines advanced 4.6 percent on reports that Tokyo’s Haneda airport will finish a runway expansion work early. Sony Corp. soared 5.9 percent on a Nikkei report that the struggling electronics giant is considering spinning off its entertainment division.

Utility Tokyo Electric Power Co. plunged 9.6 percent on profit taking, snapping a 4-day rally, while rival Chubu Electric Power rose 1.4 percent. Olympus Corp. rallied 8.5 percent on hopes of improvement in its medical instrument business. Sojitz Corp. soared 13 percent on reports of a likely 30 percent rise in the company’s pretax profit in the next financial year.

In economic releases, Japan posted a merchandise trade deficit of 879.936 billion yen in April, the Ministry of Finance said – slipping into the red for the ninth consecutive month. The headline figure missed forecasts for a shortfall of 620.6 billion yen. Exports were up 3.8 percent to 5.777 trillion yen from a year earlier, also missing forecasts for a gain of 5.4 percent.

China’s Shanghai Composite index edged down 0.1 percent on profit taking after recent gains as investors awaited preliminary manufacturing data due out on Thursday for direction. Hong Kong’s Hang Seng index slipped half a percent after the morning’s trading session was cancelled due to a storm warning.

Australian shares ended modestly lower, paring early gains, after a survey by Westpac and Melbourne Institute showed confidence among Australian consumers declined sharply in May to its lowest level since August 2012, driven largely by negative responses to the Federal Budget. The consumer sentiment index fell 7 percent to 97.6 from 104.9 in April, marking its lowest reading since August 2012. The survey also revealed that pessimists outnumbered optimists in May for the first time since October 2012. The benchmark S&P/ASX 200 slipped 15 points or 0.3 percent to 5,165.

Banks extended their recent declines, with ANZ, Commonwealth and NAB all ending down over a percent each. Global miner BHP Billiton, which carries a prospective dividend yield of 3.8 percent, rose 1.3 percent, while Rio Tinto shares advanced 1.8 percent. Seven West Media slumped nearly 8 percent after U.S. private equity firm Kohlberg Kravis Roberts & Co. sold its $264 million holding in the Australian broadcaster.

Seoul shares edged higher on mounting optimism the Fed will maintain its stimulus policies. The benchmark Kospi average closed 0.6 percent higher at 1,994.

New Zealand shares rose, mirroring firm regional cues. The benchmark NZX-50 index rose 19 points or 0.4 percent to 4,610. Retirement village operator Ryman Healthcare rallied 2.7 percent to a record high, SkyCity Entertainment Group, which has agreed to buy the Wharf Casino in Queenstown, added 0.9 percent and exporter Fisher & Paykel Healthcare gained 0.7 percent ahead of its results tomorrow. Fletcher Building, the nation’s largest construction company, advanced 1.8 percent after affirming its earnings guidance. Among those that fell, Chorus and NZX lost 2-3 percent.

Elsewhere, Indonesia’s Jakarta Composite index, Malaysia’s KLSE Composite and Singapore’s Straits Times index were up about 0.4 percent each and the Taiwan Weighted average edged up 0.2 percent, while Indian shares were subdued.

U.S. stocks posted modest gains overnight after home improvement giant Home Depot raised its sales and profit outlook for the year and comments from two Federal Reserve officials suggested the Federal Reserve remains far from winding down its bond-buying program. The Dow rose 0.3 percent, while the tech-heavy Nasdaq and the S&P 500 edged up about 0.2 percent each.

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European stocks may follow Asian stocks higher on Wednesday amid speculation the Federal Reserve would continue to provide economic stimulus until next year after St. Louis Fed President James Bullard and New York Fed President William Dudley said there is no case yet for curtailing bond purchases, given low inflation and mixed signals for growth prospects.

Nevertheless, caution may prevail as Fed Chairman Ben Bernanke testifies before the Joint Economic Committee of Congress later in the global day. Besides Bernanke’s speech, traders also await existing U.S. home sales data as well as the minutes of the latest Fed meeting for hints of potential changes in the Fed’s asset purchase program.

Closer home, the Bank of England’s minutes of May 9 meeting, U.K. retail sales and public sector net borrowing data for April are slated for release in the European session.

Asian stocks are broadly higher, buoyed by positive lead from Wall Street on expectations the Fed won’t begin tapering QE3 any time soon. Japan’s Nikkei index is rallying over 2 percent to a fresh 5-1/2 year high after the Bank of Japan pledged to maintain its ambitious quantitative easing program so that the monetary base will increase at an annual pace of about 60-70 trillion yen. Meanwhile, data from the Ministry of Finance showed that Japan’s exports rose less than expected in April from a year earlier, highlighting weakness in global demand.

Australia’s All Ordinaries index is declining 0.3 percent after a report from the Westpac-Melbourne Institute showed that a measure of Australian consumer confidence slumped by the most in 17 months in May. Hong Kong’s Hang Seng index is losing 0.6 percent as trading resumed at 1pm local time following a delay due to a storm warning.

In corporate news, French utility EDF said it is in exclusive talks with Czech utility Energeticky a Prumyslovy Holding AS to sell a stake in Slovakia’s electricity distributor Stredoslovenska Energetika AS.

A consortium of companies consisting of oilfield services provider , Samsung Engineering Co and China Huanqiu Contracting & Engineering Corporation has won a contract for a grassroot liquefied natural gas or LNG project in Canada.

European stocks rose on Tuesday, erasing earlier losses, driven by expectations that the Fed would stick to its $85 billion monthly bond-buying program until next year to bolster the economic recovery. Benchmark indexes in Germany, France, Switzerland and the U.K. rose between 0.2 percent and 0.7 percent.

U.S. stocks posted modest gains overnight after home improvement giant Home Depot raised its sales and profit outlook for the year and comments from two Federal Reserve officials suggested the Federal Reserve remains far from winding down its bond-buying program. The Dow rose 0.3 percent, while the tech-heavy Nasdaq and the S&P 500 edged up about 0.2 percent each.

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Market Analysis

The Bank of Japan on Wednesday decided to keep its ultra-loose monetary policy unchanged, as expected, suggesting that the bank is moving cautiously amid concerns over the recent turmoil in the bond market.

Reaffirming its latest easing measures, the policy board said the bank will conduct money market operations so that the monetary base will increase at an annual pace of about JPY 60-70 trillion.

In the April meeting, the board led by Governor Haruhiko Kuroda pledged to double the monetary base and its holdings of Japanese Government Bonds in two years. The easing was aimed at ending 15 years of deflation that would gradually put the economy on track for sustainable growth.

The bank said today it will continue to purchase Japanese government bonds so that the amount outstanding will increase at an annual pace of about JPY 50 trillion as planned. The purchases of JGBs are expected to put downward pressure on interest rates across the yield curve.

Kuroda said Monday that it was natural for interest rates to rise gradually if the outlook on prices and economy improves. However, the recent sudden spike in bond yields poses a policy dilemma for the bank as its seeks to achieve its inflation target of 2 percent “in about two years.”

Meanwhile, the policy board upgraded its assessment of the economy, a couple of days after the Cabinet Office raised its economic view citing improving exports aided by the weak yen.

The BoJ said that the economy has started to pick up, while exports have stopped decreasing with overseas economies moving away from deceleration phase. According to the central bank, overseas economies are heading towards a pick up.

Last month, the bank’s assessment was that the economy “has stopped weakening and has shown some signs of picking up.”

“Industrial production has stopped decreasing and signs of picking up have become increasingly evident,” the bank said. It also noted that some indicators suggested a rise in inflation expectations.

With regard to the outlook, the bank said the Japanese economy may return to a moderate recovery path amid resilient domestic demand and a gradual improvement of growth in overseas economies. The BoJ expects the year-over-year rate of change in the CPI to register smaller declines for the time being, and gradually turn positive thereafter.

Meanwhile, Board member Takahide Kiuchi raised objection to the central bank’s two-year time frame to achieve the 2 percent inflation target.

Kiuchi proposed that the bank should aim to achieve the price stability target “in the medium to long term” and “designate quantitative and qualitative monetary easing as an intensive measure with a time frame of about two years.” This proposal was defeated by 8-1 in the nine-member board.

According to most recent official data, Japan’s economy grew at an annual rate of 3.5 percent in the first three months of 2013. This was stronger than the 0.2 percent growth in the fourth quarter of 2012. On a quarterly basis, GDP expanded 0.9 percent.

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Business News

Confidence among Australian consumers declined sharply in May to its lowest level since August 2012, driven largely by negative responses to the Federal Budget, a survey by Westpac and Melbourne Institute showed Wednesday.

The index of consumer sentiment fell 7 percent in May to 97.6 from 104.9 in April. This is the lowest reading since August 2012. The survey also revealed that pessimists outnumbered optimists in May for the first time since October 2012.

Over the last two months, the index fell 11.7 percent, fully reversing a combined 9 percent increase in February and March. The decline in confidence despite the Reserve Bank’s quarter-point reduction in cash rate to a record low on May 7 reflects households’ concerns about the larger-than-expected deterioration in the fiscal position as revealed in the budget.

“In this survey we added an additional question around respondents’ assessments of the Budget and the results confirm our reasonable assumption that this weakness in confidence is being driven by a sharply negative response to the Budget,” Westpac’s Chief Economist Bill Evans said.

“Absent any other major influences, we would have expected a solid boost to the Index following that rate cut,” Evans said.

The sub indexes tracking views on family finances compared to a year ago fell 8 percent and the one-year ahead outlook on family finances declined 7 percent. The economic outlook also deteriorated with the corresponding measure falling 13.4 percent.

“The dissatisfaction is not only due to concerns around some of the savings measures in the Budget, but also the sharp deterioration in the fiscal position, indicating renewed fears about the overall state of the economy,” Evans said.

“These concerns are also likely to have been fueled by the surprise fall in the Australian dollar before and during the survey period,” he added.

The survey compiles responses from randomly selected 1,200 people and was conducted between May 13 and 18.

Treasurer Wayne Swan presented the budget on May 14, in which the government confirmed a delay in return to surplus as strong currency and falling commodity prices weighed on tax receipts.

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Business News

Nutritional products maker Herbalife Ltd. (HLF: Quote) said Tuesday that its board of directors has appointed PricewaterhouseCoopers LLP as the company’s independent auditors.

In April, KPMG LLP resigned as the independent auditor for Herbalife following alleged insider trading by one of its former senior partners. The former partner is said to have provided inside information of the company in exchange for money to an outsider who used it to trade stocks.

Herbalife noted that KPMG has stated its resignation as independent auditor was not related to Herbalife’s financial statements, its accounting practices, the integrity of Herbalife’s management, or for any other reason.

Herbalife has filed a Form 8-K, indicating that the audit committee of its board has engaged PricewaterhouseCoopers or PwC as the auditor, after an extensive evaluation process.

PwC will commence work immediately to re-audit Herbalife’s consolidated financial statements for the fiscal years ended December 31, 2010, 2011 and 2012. In addition, PwC will review the company’s condensed consolidated financial statements for the first quarter of 2013.

Leroy Barnes, chairman of Herbalife’s audit committee said, “We are very pleased to have engaged PwC to serve as the Company’s independent auditor. They will begin work immediately to re-audit the Company’s December 31, 2010, 2011 and 2012 consolidated financial statements. Investors should rest assured that the Company will be working to assist PwC in any way necessary to facilitate their work.”

A multi-level marketing company, Herbalife sells an array of weight management, nutritional supplement, energy, sports and fitness, and personal care products. The company has been the center of attention for investors ever since Pershing Square Capital Management LP’s William Ackman took a large short position in Herbalife and dubbed the company as a pyramid scheme as well as doubted its business model.

However, activist investor Carl Icahn has come to the company’s rescue, taking a stake in Herbalife and putting two representatives on the company’s board of directors. Icahn has said Herbalife has a legitimate business model, with favorable long-term opportunities for growth. Third Point LLC’s Daniel Loeb has also taken a stake in nutritional supplements maker.

HLF closed Tuesday’s trading at $50.54, up $1.33 or 2.70 percent on a volume of 10.45 million shares.

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Business News

Japanese consumer electronics company Sony Corp. (SON.L,SNE: Quote) is considering evaluating a proposal to spin off its entertainment business, the Nikkei business daily reported Tuesday.

At a board meeting on Wednesday, Sony will reportedly consider a proposal from its major shareholder, U.S-based hedge fund ThirdPoint LLC, to spin off the movie and music business. ThirdPoint owns a 6.5 percent stake in Sony.

ThirdPoint is said to have urged Sony, the maker of the PlayStation game console, Xperia smartphones and Bravia television sets, to spin off the entertainment business so that the company can use proceeds from the subsequent stock sale to reconstruct its money-losing electronics business.

According to the Nikkei report, Third Point Chief Executive Officer Daniel Loeb met with Sony President and CEO Kazuo Hirai as well as other executives while visiting Japan last week. Loeb proposed that Sony sell as much as 20 percent of its entertainment business, including the company’s U.S.-based film and television studio as well as its music business, in an initial public offering.

Loeb reportedly said that he will offer an investment of up to 200 billion yen to support the separate listing and dispatch directors to Sony if requested. Meanwhile, Sony plans to increase smartphone sales to turn the electronics operations to profitability this year.

In early May, Sony said it expects profit and sales to increase in the current year, after reporting an annual profit for the fiscal year ended March 31. For the fiscal year ending March 31, 2014,the company estimates net income to increase 16.2 percent year-over-year to 50 billion yen.

For the just concluded year, net income attributable to Sony’s stockholders was 43.03 billion yen, compared to loss of 456.66 billion yen in the previous year. Full-year sales and operating revenue advanced 5 percent to 6.80 trillion yen from 6.49 trillion yen in the prior year.

However, the company recorded a decrease in unit sales of key electronics products. Meanwhile, pictures sales for the year increased 11 percent to 732.7 billion yen. The division received significantly higher theatrical revenues from the current year’s film slate including Skyfall and The Amazing Spider-Man.

SNE closed Tuesday’s regular trading session at $22.91, up $1.94 or 9.25 percent on a volume of 22.42 million shares.

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Business News

Mortgage finance giant Fannie Mae (FNMA: Quote) plans to sell $2 billion of commercial mortgage bonds or CMBS that were issued before the 2008 financial crisis, Bloomberg reported Tuesday, citing people familiar with the offering.

The sale is reportedly part of the company’s efforts to reduce holdings of illiquid assets, even as demand for bonds backed by loans on commercial properties is surging.

Fannie Mae, which has returned to profitability after being taken over by U.S. regulators in 2008, is said to be offering securities linked to apartment complexes that were issued in 2006 and 2007. The company may reportedly follow up with similar offerings in the next several months.

In early May, Fannie Mae reported a sharp increase in first-quarter profit, due mainly to some hefty tax benefits and higher revenues stemming from a recovery in the housing market. The mortgage guarantor said it continues to benefit from better home prices and a decrease in loan delinquencies.

Fannie Mae and its sister company Freddie Mac (FMCC) went bankrupt after the 2008 financial crisis and had to rely on federal aid totaling about $190 billion. Both companies have since recovered on the back of higher home prices and lower delinquencies.

The Federal Housing Finance Agency or FHFA, which regulates Fannie Mae and Freddie Mac, has asked the two companies to sell off at least 5 percent of illiquid asset holdings this year.

FNMA closed Tuesday’s trading at $1.71, up $0.17 or 11.04 percent on a volume of 110.52 million shares.

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Business News

Data-storage products maker NetApp Inc. (NTAP: Quote) said Tuesday after the markets closed that its fourth quarter profit fell 4% from last year, hurt mainly by higher operating expenses even as revenue grew slightly.

However, the company’s quarterly earnings per share, excluding items, came in above analysts’ expectations, but its quarterly revenue fell short of analysts’ forecast.

At the same time, the company forecast first quarter revenue and earnings below analysts’ current consensus estimates.

The company also increased its current stock repurchase program, of which $1.4 billion remains outstanding, by an additional $1.6 billion. The company plans to complete the total $3 billion program over the next 3 years, of which $2 billion of repurchases to be completed within the next 12 months.

Additionally, NetApp said it has initiated a quarterly cash dividend of $0.15 per share, payable on July 23 to shareholders of record on July 11. The company plans to increase the dividend over time.

“The fourth quarter was highlighted by a continued strong uptake of clustered Data ONTAP, an expansion of our leadership position in Flash, and double digit growth in branded bookings,” said Tom Georgens, NetApp president and CEO. “We are also pleased to announce enhancements to our capital allocation program, reflecting our confidence in our underlying business as well as our commitment to enhancing shareholder value.”

The company also said it is eliminating about 900 jobs as part of a restructuring, and expects to take a $50 million to $60 million pretax charge relating to employee severance and other restructuring charges.

NetApp shares are currently gaining 3.49% in after hours trading after closing the day’s regular trading session at $36.63, down 56 cents or 1.51%. The shares trade in a 52-week range of $26.26 to $39.15.

For the fourth quarter ended April 26, 2013, the Sunnyvale, California-based company reported net income of $173.8 million or $0.47 per share, compared to $180.7 million or $0.47 per share for the year-ago quarter.

Excluding items, adjusted net income for the fourth quarter was $252.5 million or $0.69 per share, compared to $252.4 million or $0.66 per share in the prior year quarter.

On average, 34 analysts polled by Thomson Reuters expected the company to earn $0.68 per share for the fourth quarter. Analysts’ estimates typically exclude special items.

Net revenue for the fourth quarter grew slightly to $1.72 billion from $1.70 billion in the same quarter last year. Thirty-one analysts had a consensus revenue estimate of $1.76 billion for the fourth quarter.

Looking forward to the first quarter, the company forecast revenue of $1.475 billion to $1.575 billion, earnings of $0.13 to $0.18 per share and adjusted earnings of $0.45 to $0.50 per share. Analysts currently expect the company to earn $0.53 per share on revenue of $1.60 billion for the first quarter.

Media reports said last week that Elliott Management Corp. took a significant stake in NetApp and is pressing for board changes its board and boosting shareholder value.

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Business News

Shares of Saks Inc. (SKS: Quote) surged 18 percent in extended trading, after a report said the luxury retail chain has hired Goldman Sachs Group Inc. (GS) to explore strategic alternatives, including a sale of the company.

The New York Post reported after the bell that Saks has hired Goldman in recent weeks to explore alternatives. The likely bidders are large private equity firms, including KKR and Leonard Green & Partners, Post noted citing sources.

Saks, the owner of Saks Fifth Avenue stores, had reported its first quarter results early today. Saks first-quarter profit dropped from a year ago, reflecting higher charges and lower operating margins. However, the retailer’s sales for the quarter grew 5.3 percent and trumped estimates. Comparable store sales, a key financial metric for retailers, increased 5.9 percent for the quarter.

Saks had closed Tuesday’s regular trading at $13.67, up $1.39 or 11.32%, on the NYSE. The stock further gained $2.57 or 18.80% in after hours. Trading volume for the day was 12.3 million, above the three-month average volume of 2 million.

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Business News

Intuit Inc. (INTU: Quote) Tuesday reported an increase in third-quarter profit, as the accounting software maker’s revenue grew 13 percent on strong performance at the consumer tax unit.

Intuit, which makes software like QuickBooks and TurboTax to file taxes, said revenues for the quarter grew 13 percent to $2.18 billion from $1.93 billion a year ago.

Fourteen analysts polled by Thomson Reuters had a consensus revenue estimate of $2.18 billion for the quarter.

Intuit generates about half of its annual revenues in the third quarter, due to the tax season. Revenue growth for the quarter reflects strong performance at Consumer Tax division, the biggest segment, where revenues grew 14 percent to $1.22 billion.

Chief Executive Brad Smith said, “TurboTax paid units increased 4 percent, and we expect TurboTax revenue growth of about 4 percent for the fiscal year. While it was a challenging tax season overall, we made progress in several key areas, growing new customers including first-time filers and former tax store customers, and significantly increasing mobile adoption.”

Mountain View, California-based Intuit’s third-quarter profit rose to $822 million or $2.71 per share from $734 million or $2.42 per share last year. Excluding items, earnings rose to $2.97 per share from $2.52 per share last year.

On average, 19 analysts expected earnings of $2.93 per share for the quarter. Analysts’ estimates typically exclude special items.

Late last month, Intuit had lowered its third-quarter and full year outlook, hurt by a 2 percent decline in Internal Revenue Service returns received in the recent tax season.

Looking forward to the fourth quarter, Intuit expects earnings of $0.07 to $0.11 per share, adjusted earnings of $0.03 to $0.07 per share and revenues of $702 million to $727 million.

Analysts currently estimate earnings of $0.11 per share with revenues of $726.72 million for the fourth quarter.

For the full year 2013, Intuit expects earnings of $2.77 to $2.81 per share, down from previous estimate of $2.90 to $2.94 per share.

The company, however, continues to see adjusted earnings of $3.31 to $3.35 per share and revenues of $4.50 billion to $4.52 billion.

Analysts currently estimate earnings of $3.33 per share on revenues of $4.51 billion for the year.

INTU closed Tuesday’s trading at $57.89, down $1.75 or 2.93%, on the Nasdaq. The stock, however gained $0.23 or 0.40%, in after hours trade.

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Business News