Bloomberg News

Japanese Stock Futures, Australian Shares Decline on Greek Debt

October 31, 2011

Nov. 1 (Bloomberg) -- Japanese stock futures and Australian shares fell after Greek Prime Minister George Papandreou pledged to put the European Union’s agreement on financing for Greece to a referendum, reviving concerns the country will default on its debt.

American depositary receipts of Sony Corp., Japan’s No. 1 exporter of consumer electronics, fell 2.5 percent from the closing share price in Tokyo. Those of Honda Motor Co., Japan’s second-largest carmaker by market value, slid 2.8 percent after reporting second-quarter profit that missed analysts’ estimates. BHP Billiton Ltd., the world’s biggest mining company, declined 2.4 percent in Sydney after metal prices dropped.

Futures on Japan’s Nikkei 225 Stock Average expiring in December closed at 8,885 in Chicago yesterday, down from 8,960 in Osaka, Japan. They were bid in the pre-market at 8,880 in Osaka at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index dropped 1.2 percent today. New Zealand’s NZX 50 Index fell 0.1 percent in Wellington.

“There are still a lot of question marks over the viability of the deal that was announced last week,” said Belinda Allen, a senior investment analyst at Colonial First State Global Asset Management in Sydney, which oversees about $145 billion. “There’s still a lot of concern out there how the solvency issue will be solved in Europe. Those question marks certainly forced the equity market to fall overnight.”

Default Risks

Futures on the Standard & Poor’s 500 Index slid 0.4 percent today. In New York, the index fell 2.5 percent yesterday.

Papandreou’s gambit risks pushing the country into default if rejected by voters, and it raises the ante with dissidents inside his own party. European stocks slumped, paced by losses in banks, as Italian and Spanish bonds declined.

MF Global Holdings Ltd., the holding company for the broker-dealer run by Jon Corzine, former New Jersey governor and Goldman Sachs Group Inc. co-chairman, filed for bankruptcy after making bets on European sovereign debt.

Losses in Japanese equities may be limited after the government signaled it is prepared to keep intervening in the currency market to ward off speculators from yen purchases. Finance Minister Jun Azumi said he will “continue to intervene until I am satisfied,” after yen sales yesterday that Credit Suisse Group AG analysts estimated may have exceeded $50 billion.

A weaker yen helps Japanese exporters as it boosts the value of their overseas earnings.

The MSCI Asia Pacific Index declined 12 percent this year through yesterday, compared with a 0.4 percent loss by the S&P 500 and a 12 percent drop by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.3 times estimated earnings on average, compared with 12.6 times for the S&P 500 and 10.5 times for the Stoxx 600.

The London Metal Exchange Index of prices for six industrial metals including copper and aluminum lost 1.6 percent yesterday.

--Editors: John McCluskey, Jason Clenfield.

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

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


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