Bloomberg News

Japanese, Australian Stock Futures Fall on U.S. Manufacturing

August 01, 2011

Aug. 2 (Bloomberg) -- Japanese and Australian stock futures fell after a report showing the slowest growth in U.S. manufacturing in two years spurred concern the global economic recovery is faltering.

American depositary receipts of Canon Inc., the world’s largest maker of cameras and office equipment that gets more than 80 percent of its revenue abroad, declined 1.1 percent from the closing share price in Tokyo. Those of Toyota Motor Corp., the biggest global carmaker that gets 28 percent of sales in North America, dropped 0.3 percent. ADRs of BHP Billiton Ltd., the world’s largest mining company and Australia’s No. 1 oil producer, lost 2.3 percent.

Futures on Japan’s Nikkei 225 Stock Average expiring in September closed at 9,815 in Chicago yesterday, compared with 9,970 in Osaka, Japan. They were bid in the pre-market at 9,820 in Osaka at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index declined 1.6 percent today. New Zealand’s NZX 50 Index slipped 0.3 percent in Wellington.

The U.S. manufacturing report showed “the economy is slowing globally, and that heightens uncertainties about the outlook of earnings at companies expecting recovery in the second-half period,” said Kenichi Hirano, general manager and strategist at Tachibana Securities Co. in Tokyo.

In New York yesterday, the Standard & Poor’s 500 Index lost 0.4 percent to 1,286.94 as slower-than-forecast growth in manufacturing erased a rally triggered by speculation lawmakers would raise the federal debt ceiling.

House Approves Bill

Futures on the index rose 0.1 percent today after the House approved legislation to raise the debt limit by at least $2.1 trillion and cut federal spending by $2.4 trillion or more, one day before a threatened default.

The House voted 269-161 for the plan negotiated by leaders and President Barack Obama over the weekend. The measure goes to the Senate for a final vote planned tomorrow.

A report showed U.S. manufacturing expanded in July at the slowest pace in two years, indicating the industry that’s been driving the economic expansion is starting to weaken. The Institute for Supply Management’s factory index fell to 50.9 last month from 55.3 in June. Economists projected the index would drop to 54.5, according to the median forecast in a Bloomberg News survey. Figures greater than 50 signal expansion.

The yen appreciated to as high as 76.30 against the dollar yesterday, the strongest level since March. Against the euro, Japan’s currency strengthened to 108.72 from 111.72 at the close of stock trading in Tokyo yesterday. A stronger yen hurts Japanese exporters because it cuts the value of overseas sales.

Intervention Report

The yen pared its gains against the dollar to 77.50 after the Nikkei newspaper reported the Japanese government is preparing steps to reverse the currency’s recent gains and the Bank of Japan may consider a 5 trillion ($65 billion) to 10 trillion yen expansion of a 40 trillion yen asset-buying fund at an Aug. 4- 5 meeting.

The U.S. government told Japanese officials that all available measures to stabilize the currencies should be used, Nikkei also reported, without indentifying the sources of its information. Coordinated yen-selling by Japan, the U.S. and Europe wouldn’t be ruled out if the currency continues to strengthen, according to Nikkei.

“People were afraid shares may plunge if the yen strengthens against the dollar further, but if intervention helps sustain the currency’s level, that should provide a sense of ease,” Tachibana Securities’ Hirano said.

The MSCI Asia Pacific Index increased 0.9 percent this year through yesterday, compared with a gain of 2.3 percent by the S&P 500 and a drop of 5 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13.6 times estimated earnings on average, compared with 12.9 times for the S&P 500 and 10.7 times for the Stoxx 600.

Crude oil for September delivery fell 1.4 percent to $94.39 a barrel in New York yesterday. The London Metal Exchange Index of prices for six industrial metals including copper and aluminum declined 1.6 percent, the most since July 14.

--Editors: John McCluskey, Jason Clenfield.

To contact the reporters on this story: Akiko Ikeda in Tokyo at; Toshiro Hasegawa in Tokyo at

To contact the editor responsible for this story: Nick Gentle at

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