Bloomberg News

Japanese Futures Drop on U.S. Economic Outlook, Weaker Dollar

June 07, 2011

June 8 (Bloomberg) -- Japanese stock futures declined as Federal Reserve Chairman Ben S. Bernanke gave no hint of a new round of economic stimulus even as the recovery slows. Australian stock futures were little changed.

American depositary receipts of Canon Inc., the world’s biggest camera maker, lost 0.5 percent from the closing price in Tokyo. Toyota Motor Corp., an automaker that earns about 70 percent of its revenue abroad, slid 0.5 percent after the dollar weakened, cutting the earnings outlook for the exporter. ADRs of BHP Billiton Ltd., Australia’s No. 1 oil producer, gained 0.6 percent after oil prices advanced.

“Some people had expected further monetary easing, but Chairman Bernanke didn’t mention it,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc. “There are concerns about a slowdown in the global economy, including the U.S.”

Futures on Japan’s Nikkei 225 Stock Average expiring in June closed at 9,415 in Chicago yesterday, compared with 9,450 in Osaka, Japan. They were bid in the pre-market at 9,420 in Osaka, at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index were little changed today.

Futures on the Standard & Poor’s 500 Index rose 0.1 percent today. In New York yesterday, the index fell for a fifth day, the longest slump for the S&P in almost a year, sliding 0.1 percent to its lowest level since March 18. Bernanke yesterday said the central bank should maintain record monetary stimulus to boost an “uneven” and “frustratingly slow” economic recovery.

Asset Purchases

“While Bernanke’s comments suggest that the Fed will be there to provide liquidity, I don’t think that his assessment is that there will be additional asset purchases,” said Kevin Caron, a market strategist in Florham Park, New Jersey, at Stifel Nicolaus & Co, which has $115 billion in client assets. “The market reacted to the absence of direct commitment to quantitative easing.”

The S&P 500 has fallen 4.5 percent over the past five days as signs of a slowing economy spurred concern analyst estimates for 20 percent earnings growth this year are too optimistic. Recent data showing weakness in the economy, including an increase in the unemployment rate to 9.1 percent in May, has raised the odds the Fed will hold the benchmark interest rate near zero into next year.

Yen Rises

The dollar fell against most of its major counterparts. The Japanese currency reached the strongest level against the greenback in a month as Bernanke spoke to bankers in Atlanta. The yen appreciated to as high as 79.98 against the dollar today in Tokyo, compared with 80.31 at the close of stock trading yesterday, cutting the value of overseas earnings at Japanese companies when repatriated.

Crude oil for July delivery yesterday settled at $99.09 a barrel in New York, the first gain in three days amid speculation that an increase in OPEC production quotas will reduce spare capacity and cause tight supplies when demand rebounds.

The London Metal Exchange Index of prices for six metals including copper and aluminum rose for a third day yesterday. Gold futures for August delivery slumped 0.2 percent to settle at $1,544 in New York yesterday.

The MSCI Asia Pacific Index slid 2.9 percent this year through yesterday, compared with a gain of 2.2 percent by the S&P 500 and a drop of 1.4 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13.5 times estimated earnings on average, compared with 12.9 times for the S&P 500 and 11 times for the Stoxx 600.

--Editors: John McCluskey, Jason Clenfield.

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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