Bloomberg News

Japanese Futures, Australia Shares Fall on Europe Debt Concern

October 13, 2011

Oct. 14 (Bloomberg) -- Japanese stock futures and Australian shares fell after Standard & Poor’s cut Spain’s credit rating, fueling concern that a deterioration of Europe’s debt crisis will weigh on Asian economies and corporate earnings.

American depositary receipts of Nissan Motor Co., a carmaker that gets about 80 percent of its sales overseas, slid 1 percent from the closing share price in Tokyo. Those of Mitsubishi UFJ Financial Group Inc., Japan’s biggest lender, fell 1 percent after JPMorgan Chase & Co., the second-largest U.S. bank by assets, said profit declined. BHP Billiton Ltd., the world’s biggest mining company, lost 1.7 percent in Sydney this morning after commodity prices slumped yesterday.

“Investors are hoping Europe will find a solution to the sovereign-debt crisis, but if that doesn’t happen the market could come back down again,” said Lee King Fuei, a Singapore- based fund manager at Schroders Plc, which oversaw $323 billion as of June 30. “Politically, it’s going to be difficult to find a solution. Governments in the U.S. and Europe are left with limited stimulus options.”

Futures on Japan’s Nikkei 225 Stock Average expiring in December closed at 8,795 in Chicago yesterday, compared with 8,800 in Osaka, Japan. They were bid in the pre-market at 8,780 in Osaka at 8:05 a.m. local time after Spain had its long-term sovereign credit rating cut to AA- from AA by Standard & Poor’s. Australia’s S&P/ASX 200 Index sank 0.6 percent, while New Zealand’s NZX 50 Index was little changed.

JPMorgan Earnings

Futures on the Standard & Poor’s 500 Index lost 0.2 percent. The U.S. gauge slipped 0.3 percent in New York yesterday, paring gains from the best rally over seven days since 2009, after JPMorgan’s earnings dropped and amid speculation that equities rose too much on optimism Europe’s debt crisis may be contained.

Stocks in Europe fell yesterday after the European Central Bank said imposing further losses on holders of Greek debt posed a risk to the euro area’s financial stability.

New York-traded copper futures fell 2.6 percent yesterday, while the London Metal Exchange Index of prices for six metals including copper and aluminum sank 2.4 percent. Crude oil futures in New York slipped 1.6 percent.

An escalation in Europe’s debt crisis may trigger a selloff in Asian assets and disrupt currency markets, the International Monetary Fund said yesterday. The IMF report came even as Slovakia approved Europe’s enhanced bailout fund, completing ratification across the 17 euro countries.

The MSCI Asia Pacific Index dropped 15 percent this year through yesterday, compared with a 4.3 percent loss by the S&P 500 and a 14 percent decline by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12 times estimated earnings on average, compared with 12.1 times for the S&P 500 and 10.1 times for the Stoxx 600.

--Editors: Jason Clenfield, Jim McDonald

To contact the reporters on this story: Shani Raja in Sydney at sraja4@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.


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