Bloomberg News

Japanese, Australia Stock Futures Fall After Bernanke Testifies

July 14, 2011

July 15 (Bloomberg) -- Japanese and Australian stock futures fell as crude oil dropped after Federal Reserve Chairman Ben S. Bernanke said he’s not prepared to take immediate action to stimulate the world’s biggest economy.

American depositary receipts of Mitsubishi Corp., Japan’s largest commodities trader, dropped 0.4 percent from the closing share price in Tokyo. Those of Nissan Motor Co., a Japanese automaker that gets one third of its revenue in North America, gained 0.6 percent after the yen’s appreciation eased. ADRs of BHP Billiton Ltd., the world’s biggest mining company and Australia’s No. 1 oil producer, retreated 1.3 percent.

Futures on Japan’s Nikkei 225 Stock Average expiring in September closed at 9,920 in Chicago yesterday, compared with 9,930 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 slid 0.2 percent today. New Zealand’s NZX 50 Index gained 0.2 percent in Wellington.

“There will be a tug of war between a decline in crude prices dragging natural resource-related companies lower and the yen supporting exporters,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc. “It’s difficult for investors to be aggressive ahead of stress tests of European banks.”

The European Banking Authority will release, after the close of European equity markets today, the results of the stress tests for 91 banks as part of an effort to reassure investors the region’s lenders have sufficient capital.

Bernanke Testifies

Futures on the Standard & Poor’s 500 Index were little changed today. In New York, the index slipped 0.7 percent to 1,308.87 yesterday, the lowest level this month, as a stalemate continued in Washington on negotiations over the U.S. debt ceiling.

Bernanke, testifying for a second day before the Senate Banking Committee, told lawmakers yesterday: “We’re not prepared at this point to take further action.” A day earlier, he had said he was prepared to provide more stimulus if needed.

Bernanke said yesterday that inflation now is “higher” and “closer” to the central bank’s informal target than was the case in August and that’s one reason the Fed won’t immediately embark on a third round of bond-buying.

U.S. equities had gained earlier in the day as government reports showed retail sales unexpectedly increased and jobless claims fell more than economists estimated.

Oil Falls

The 0.1 percent increase in retail sales reported by the Commerce Department compared with the median forecast of a 0.1 percent drop in the Bloomberg News survey of 80 economists. Excluding auto sales, purchases were little changed, the weakest performance since July 2010. Separate data showed initial jobless claims fell by 22,000 to 405,000 last week.

Crude oil for August delivery dropped 2.4 percent to settle at $95.69 a barrel in New York yesterday. Oil has risen 23 percent in the past year.

The London Metal Exchange Index of prices for six industrial metals including copper and aluminum fell 1.8 percent.

The MSCI Asia Pacific Index lost 1.5 percent this year through yesterday, compared with a gain of 4.1 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 13.5 times estimated earnings on average, compared with 13.2 times for the S&P 500 and 10.7 times for the Stoxx 600.

The yen depreciated to 79.27 against the dollar, compared with 78.98 at the close of stock trading in Tokyo yesterday. A weaker yen boosts the value of overseas income at Japanese companies when converted into their home currency.

--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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