Bloomberg News

Japanese Stock Futures Fall on Yen; Australia Little Changed

July 13, 2011

July 14 (Bloomberg) -- Japanese stock futures fell as the dollar weakened against the yen after Moody’s Investors Service put the U.S. under review for a credit-rating downgrade, hurting the outlook for Asian exporters. Australian stocks futures were little changed.

American depositary receipts of Nissan Motor Co., Japan’s second-largest automaker that counts North America as its No. 1 market, declined 0.7 percent from the closing share price in Tokyo. Those of Canon Inc., a camera maker that gets more than 80 percent of its revenue outside Japan, dropped 0.4 percent. ADRs of Woodside Petroleum Ltd., Australia’s second-biggest oil and gas producer, gained 0.6 percent after crude prices increased.

Futures on Japan’s Nikkei 225 Stock Average expiring in September closed at 9,935 in Chicago yesterday, compared with 9,950 in Osaka, Japan. They were bid in the pre-market at 9,940 in Osaka at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index were little changed today. New Zealand’s NZX 50 Index slid 0.2 percent in Wellington.

“As the yen strengthens against the dollar, there will be some selling of exporters as concern mounts that earnings may deteriorate,” said Mitsushige Akino, who oversees about $600 million in Tokyo at Ichiyoshi Investment Management Co. in Tokyo. “It’s not yet known whether the U.S. economy will worsen. If concerns about the U.S. increase, it’s possible for the yen will appreciate further against the dollar.”

Debt ‘Crapshoot’

Futures on the Standard & Poor’s 500 Index slid 0.3 percent today. In New York, the index pared gains to 0.3 percent from as much as 1.4 percent yesterday after the Associated Press reported that House Speaker John Boehner said it’s a “crapshoot” whether the federal debt limit will be boosted if an agreement isn’t reached by Aug. 2.

Moody’s Investors Service put the U.S., rated Aaa since 1917, under review for a credit-rating downgrade for the first time since 1995 on concern the government’s $14.3 trillion debt limit will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes even though the risk remains low. The rating would likely be reduced to the Aa range and there is no assurance that Moody’s would return its top rating even if a default is quickly cured.

Federal Reserve Chairman Ben S. Bernanke told Congress the central bank is prepared to take additional action, including buying more government bonds, if the economy appears to be in danger of stalling. The Fed last month completed a program to buy $600 billion of Treasury bonds that aimed to stimulate the economy by reducing borrowing costs, boosting stock prices and spurring consumer spending.

Yen Rises

The yen appreciated to 78.50 against the dollar, compared with 79.56 at the close of stock trading in Tokyo yesterday. A stronger yen reduces income at Japanese companies when overseas revenue is converted into their home currency.

The MSCI Asia Pacific Index lost 1.2 percent this year through yesterday, compared with a gain of 4.8 percent by the S&P 500 and a drop of 2.1 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13.6 times estimated earnings on average, compared with 13.3 times for the S&P 500 and 10.8 times for the Stoxx 600.

Crude oil for August delivery increased 0.6 percent to settle at $98.05 a barrel in New York yesterday after a U.S. Energy Department report showed inventories fell more than expected last week. The London Metal Exchange Index of prices for six industrial metals including copper and aluminum climbed 2.2 percent.

--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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