Bloomberg News

Japanese, Australian Stock Futures Fall on Fed’s Bond Buying

September 21, 2011

Sept. 22 (Bloomberg) -- Japanese and Australian stock futures fell after the Federal Open Market Committee pledged to buy $400 billion of long-term debt and cited risks to the economic outlook, damping the earnings prospects for Asian exporters.

American depositary receipts of Toyota Motor Corp., the world’s biggest carmaker that gets 28 percent of its sale in the U.S. and Canada, slid 2.1 percent from the closing share price in Tokyo. Those of Mitsubishi UFJ Financial Group Inc., Japan’s largest lender by market value, fell 3.9 percent after Moody’s Investors Service cut its ratings on three major U.S. banks. ADRs of Woodside Petroleum Ltd., Australia’s No. 2 oil and gas producer, dropped 1.3 percent after crude prices fell.

Futures on Japan’s Nikkei 225 Stock Average expiring in December closed at 8,530 in Chicago yesterday, down from 8,680 in Osaka, Japan. They were bid in the pre-market at 8,580 in Osaka at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index declined 2.6 percent today. New Zealand’s NZX 50 Index lost 0.6 percent in Wellington.

“There was no surprise about the FOMC’s monetary policy, and it highlighted how severe the U.S. economy is,” said Mitsushige Akino, who oversees about $600 million in Tokyo at Ichiyoshi Investment Management Co. “The FOMC didn’t go beyond buying longer-term debt. Stocks may come under sell pressure again.”

Futures on the Standard & Poor’s 500 Index rose 0.1 percent today. In New York, the index slid 2.9 percent yesterday, the biggest drop since Aug. 18.

‘Operation Twist’

The Federal Reserve said yesterday it will purchase longer- term debt and sell shorter maturities to sustain the economic recovery, confirming market speculation that the central bank was planning an “Operation Twist” similar to one of the central bank’s programs in the 1960s.

Banks fell after Bank of America Corp. and Wells Fargo & Co. had their long-term credit ratings downgraded by Moody’s, which cited a decreasing probability that the U.S. would support the lenders in an emergency. Citigroup Inc.’s short-term credit rating was cut.

The MSCI Asia Pacific Index declined 14 percent this year through yesterday, compared with a 7.2 percent drop by the S&P 500 and an 18 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 11.9 times estimated earnings on average, compared with 11.7 times for the S&P 500 and 9.5 times for the Stoxx 600.

Crude oil for November delivery fell 1.2 percent to settle at $85.92 a barrel on the New York Mercantile Exchange yesterday.

The yen reached 103.67 per euro today, the strongest level since June 2001, before trading at 104.07. A stronger yen hurts Japanese exporters because it cuts the value of their overseas income.

--Editors: John McCluskey.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@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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