Bloomberg News

Japanese Stock Futures Fall on Greek Debt Threat, U.S. Economy

June 15, 2011

June 16 (Bloomberg) -- Japanese and Australian stock futures fell on concern debt-ridden Greece will default and after reports showed the U.S. economy is cooling.

American depositary receipts of Toyota Motor Corp., the world’s largest carmaker, lost 1.1 percent from the closing share price in Tokyo. Those of Advantest Corp., the No. 1 maker of chip-testing equipment, declined 1.7 percent. ADRs of BHP Billiton Ltd., the largest global mining company and Australia’s No. 1 oil producer, dropped 1.7 percent after crude and metal prices fell.

Futures on Japan’s Nikkei 225 Stock Average expiring in September closed at 9,475 in Chicago yesterday, compared with 9,580 in Osaka, Japan. They were bid in the pre-market at 9,500 in Osaka, at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index declined 1.2 percent today. New Zealand’s NZX 50 Index sank 0.7 percent in Wellington.

“The Greek issues are dragging on and we cannot be optimistic,” said Mitsushige Akino, who oversees about $600 million in Tokyo at Ichiyoshi Investment Management Co. “We’ve started to see a soft patch in the U.S. more clearly and investors are getting defensive.”

Futures on the Standard & Poor’s 500 Index gained 0.2 percent today. In New York, the index slumped 1.7 percent to 1,265.42 yesterday on concern Greece will default and signs the American economy is cooling.

Greek Debt

European officials failed to agree on a rescue plan for debt-ridden Greece. Prime Minister George Papandreou will name a new Greek government tomorrow and call a vote of confidence in parliament as he seeks to pressure opposition lawmakers to back an austerity plan that aims to secure a new bailout.

The European Central Bank said the threat of the Greek debt crisis spilling over into the banking sector is the biggest risk to the region’s financial stability.

“Greece could have a contagion effect,” ECB Vice President Vitor Constancio said at a briefing in Frankfurt yesterday, when presenting the bank’s semi-annual Financial Stability Review. “That’s the reason why we are against any sort of default with haircuts and any form of private-sector event that could lead to a credit event or a rating event.”

The yen appreciated to 114.56 against the euro, compared with 116.04 at the close of stock trading in Tokyo yesterday, a level not seen since May 26. A stronger yen reduces income at Japanese companies when overseas revenue is converted into their home currency.

U.S. Economy

In the U.S., a report showed manufacturing in the New York region unexpectedly shrank in June, a sign the industry still faces parts shortages following the March earthquake and tsunami in Japan. Another report showed confidence among U.S. homebuilders slumped in June to the lowest level in nine months as executives turned more pessimistic on the outlook for sales, a sign that any pickup will take time to develop.

Separately, Federal Reserve figures showed industrial production in the U.S. rose less than forecast in May. The cost of living in the world’s biggest economy increased more than forecast last month, reflecting higher prices for everything from autos to hotel rooms, another report showed.

The MSCI Asia Pacific Index lost 3.7 percent this year through yesterday, compared with a gain of 0.6 percent by the S&P 500 and a drop of 2.9 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13.4 times estimated earnings on average, compared with 12.8 times for the S&P 500 and 10.8 times for the Stoxx 600.

Crude oil for July delivery tumbled 4.6 percent to $94.81 a barrel in New York yesterday, the lowest settlement since Feb. 22. The London Metal Exchange Index of prices for six industrial metals including copper and aluminum dropped 0.8 percent yesterday.

--Editors: John McCluskey, Jason Clenfield.

To contact the reporters on this story: Akiko Ikeda in Tokyo at iakiko@bloomberg.net; Satoshi Kawano in Tokyo at skawano1@bloomberg.net.

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


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