Bloomberg News

Japan, Australia Stock Futures Fall as Fed Cuts Growth Forecast

June 22, 2011

June 23 (Bloomberg) -- Japanese and Australian stock futures fell after the Federal Reserve lowered its forecast for growth in the world’s biggest economy and as commodities dropped.

American depositary receipts of Canon Inc., the world’s largest camera maker that gets about 28 percent of its sales in the Americas, dropped 0.5 percent from the closing share price in Tokyo. Those of Sharp Corp., Japan’s biggest maker of liquid- crystal displays, declined 1 percent. ADRs of BHP Billiton Ltd., the world’s largest mining company and Australia’s No. 1 oil producer, slid 0.2 percent.

Futures on Japan’s Nikkei 225 Stock Average expiring in September closed at 9,555 in Chicago yesterday, compared with 9,610 in Osaka, Japan. They were bid in the pre-market at 9,560 in Osaka at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index dropped 0.4 percent today. New Zealand’s NZX 50 Index gained 0.1 percent in Wellington.

“Stocks have almost priced in the U.S. economic soft patch, but it should take a while to identify whether the economy will worsen further or not,” said Mitsushige Akino, who oversees about $600 million in Tokyo at Ichiyoshi Investment Management Co.

Futures on the Standard & Poor’s 500 Index slipped 0.3 percent today. In New York, the index lost 0.7 percent to 1,287.14 yesterday.

Fed officials lowered their forecasts for U.S. growth and employment this year and next, projecting the economy will expand by between 2.7 percent and 2.9 percent this year, down from forecasts ranging from 3.1 percent to 3.3 percent in April. Inflation, excluding food and energy, will be somewhat higher than previously forecast, policymakers said. They said the pace of recovery is likely to “pick up over coming quarters.”

‘Moderate Pace’

“The economic recovery is continuing at a moderate pace, though somewhat more slowly than the committee had expected,” the Federal Open Market Committee said yesterday in a statement. “The committee will complete its purchases of $600 billion of longer-term Treasury securities by the end of this month and will maintain its existing policy of reinvesting principal payments from its securities holdings.”

The MSCI Asia Pacific Index lost 4.2 percent this year through yesterday, compared with a gain of 2.3 percent by the S&P 500 and a drop of 2.8 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 10.9 times for the Stoxx 600.

Crude for August delivery fell as much as 1.2 percent to $94.30 a barrel in electronic trading in New York today. Copper for delivery in three months dropped 0.7 percent in London yesterday.

--Editors: John McCluskey, Jason Clenfield.

To contact the reporters on this story: Akiko Ikeda in Tokyo at iakiko@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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