Bloomberg News

Japanese Stock Futures, Australia Shares Fall on Alcoa, Europe

October 11, 2011

Oct. 12 (Bloomberg) -- Japanese stock futures and Australian shares fell as optimism about U.S. corporate earnings waned after Alcoa Inc. reported third-quarter profit that missed analyst estimates and amid concern Europe’s debt crisis will worsen.

American depositary receipts of Nissan Motor Co., a carmaker that gets about 80 percent of its revenue overseas, fell 0.5 percent from the closing share price in Tokyo. Those of Honda Motor Co., Japan’s second-largest automaker by revenue, lost 1.6 percent after it said production may fall by about 4,500 vehicles because of plant closures caused by flooding in Thailand. BHP Billiton Ltd., the world’s biggest mining company, dropped 1.3 percent after metal prices declined.

Futures on Japan’s Nikkei 225 Stock Average expiring in December closed at 8,745 in Chicago yesterday, compared with 8,770 in Osaka, Japan. They were bid in the pre-market at 8,730 in Osaka at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index lost 0.6 percent today. New Zealand’s NZX 50 Index fell 1.9 percent in Wellington.

“Less-than-expected earnings from Alcoa will likely move investors to sell exporter shares to lock in profits, as the market had been rising on optimism about U.S. corporate earnings,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc.

Futures on the Standard & Poor’s 500 Index fell 0.3 percent today. In New York, the index rose 0.1 percent yesterday, trading within a 1 percent range between its high and low level for the day. The Dow Jones Industrial Average retreated 0.2 percent yesterday.

Alcoa ‘Disaster’

Alcoa, the first company of the Dow to report results for the third quarter, climbed 2.1 percent in regular trading. The shares tumbled 4.8 percent at 5:08 p.m. after the largest U.S. smelter of aluminum reported profit that trailed analysts’ estimates as production costs increased and the pace of global demand growth slowed.

The earnings were a “disaster,” Charles Bradford, a metals analyst at Bradford Research Inc. in New York, said in an interview. “The only way that could happen is if you let costs get out of control.”

In Europe, the benchmark Stoxx Europe 600 Index slipped 0.3 percent yesterday, snapping a four-day rally, amid uncertainty that Slovakia will ratify the euro area’s revised bailout fund. Slovakia is the only member of the euro area that hasn’t ratified a retooled bailout fund.

‘Asia Vulnerable’

“Asian stocks remain vulnerable to short-term setbacks, particularly in places like Europe, which could trigger profit taking,” said Nader Naeimi, a Sydney-based strategist for AMP Capital Investors Ltd.

Copper fell 2.3 percent yesterday in New York, the biggest drop for a most-active contract since Sept. 30, on concern that metal demand will slide as the global economy falters, Chinese exports wane and Europe’s debt woes escalate. The London Metal Exchange Index of prices for six metals including copper and aluminum lost 2.3 percent yesterday, its first drop in four days.

The MSCI Asia Pacific Index dropped 16 percent this year through yesterday, compared with a 4.9 percent loss by the S&P 500 and a 15 percent decline by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 11.8 times estimated earnings on average, compared with 11.9 times for the S&P 500 and 10 times for the Stoxx 600.

The Japanese government is scheduled to release a report on machinery orders at 8:50 a.m. today in Tokyo.

--With assistance from Shani Raja in Sydney. Editors: John McCluskey, Jason Clenfield.

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@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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