Bloomberg News

Japan, Australian Futures Drop on Slow Growth, Yen

June 06, 2011

(Corrects direction of yen in first paragraph.)

June 7 (Bloomberg) -- Japanese and Australian stock futures declined as the yen advanced and oil prices fell amid concern global economic growth will slow.

American depositary receipts of Canon Inc., the world’s biggest camera maker, lost 1 percent from the closing price in Tokyo. Those of Mizuho Financial Group Inc., Japan’s third- largest publicly traded lender, slid 1 percent. ADRs of BHP Billiton Ltd., Australia’s No. 1 oil producer, sank 1 percent.

Futures on Japan’s Nikkei 225 Stock Average expiring in June closed at 9,360 in Chicago yesterday, compared with 9,405 in Singapore. They were bid in the pre-market at 9,370 in Osaka, at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index slid 0.7 percent today.

“Investors have a deep-seated concern about the U.S. economy,” said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co. “Investors will be watching the movement of U.S. futures to check whether U.S. stocks will stop falling.”

Futures on the Standard & Poor’s 500 Index were little changed today. In New York yesterday, the index retreated 1.1 percent to the lowest level since March 18, falling for a fourth day amid concern economic growth is slowing and the Federal Reserve will boost capital requirements for the nation’s largest banks.

Banks Drop

Financial shares had the second-biggest drop in the S&P 500 within 10 industries yesterday after Fed Governor Daniel Tarullo said on June 3 that regulators should use capital surcharges to discourage mergers by large banks that would increase risk without yielding significant public benefits, signaling the Fed aims to use tougher capital standards related to the size of a firm to curb risks posed by “systemically important financial institutions.”

After the market closed, Federal Reserve Bank of Dallas President Richard Fisher reiterated his view that the nation’s largest banks may eventually need to be broken up to prevent them from posing threats to stability and economic growth. “I trust regulators will rise to the challenges posed by the financial crisis,” Fisher, 62, said in the text of a speech in New York. If they don’t, “we will ultimately have to take more Draconian measures.”

In Europe, a survey by Goldman Sachs Group Inc. yesterday said banks in the European Union may have to raise 29 billion euros ($42 billion) following this year’s stress tests.

Yen Rises

The yen rose for a fourth day against the dollar, the longest winning streak in more than a month, and gained versus the euro as signs of slowing global economic growth and a drop in stocks spurred demand for a refuge investment. The euro fell against most of its 16 most-traded counterparts after Jean- Claude Juncker, head of the euro-area finance ministers, said the currency is overvalued.

The yen touched a level stronger than 80 versus the dollar last night in Tokyo, for the first time since May 5. Against the euro, Japan’s currency strengthened to as much as 116.59 today, compared with 117.64 at the close of stock trading yesterday. A stronger yen cut the value of overseas earnings at Japanese companies when repatriated.

Crude oil for July delivery yesterday declined 1.2 percent to the lowest settlement since May 23 in New York on speculation that demand for fuel is faltering along with economic growth and as ministers from the Organization of Petroleum Exporting Countries arrive in Vienna to discuss production targets.

The MSCI Asia Pacific Index slid 3 percent this year through yesterday, compared with a gain of 2.3 percent by the S&P 500 and a drop of 1.3 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13.5 times estimated earnings on average, compared with 13 times for the S&P 500 and 11 times for the Stoxx 600.

--Editor: John McCluskey.

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.


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