Bloomberg News

Japanese Stock Futures Fall as German Debt Sale Sparks Concern

November 23, 2011

Nov. 24 (Bloomberg) -- Japanese stock futures and Australian shares fell after Germany failed to receive sufficient bids at a debt sale, adding to concern Europe’s crisis is worsening and driving away investors from risky assets.

American depositary receipts of Sony Corp., Japan’s No. 1 exporter of consumer electronics, fell 3.6 percent from the closing share price in Tokyo. Those of Mizuho Financial Group Inc., Japan’s third-largest bank by market value, declined 5.3 percent. Billabong International Ltd., a global surfwear maker, fell 4.3 percent in Sydney.

Futures on Japan’s Nikkei 225 Stock Average expiring in December closed at 8,150 in Chicago yesterday, compared with 8,320 in Osaka, Japan, on Nov. 22. Japan’s stock markets were closed yesterday for a public holiday. The contracts were bid in the pre-market at 8,210 in Osaka, at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index dropped 0.2 percent today. New Zealand’s NZX 50 Index fell 1 percent in Wellington.

“The market has finally realized that Germany has a high level of public debt,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “Germany looks to be losing its safe-haven status, and it highlights the extent to which the European debt crisis has deteriorated. It can be only bad news for risky assets like equities.”

German Debt Sale

Futures on the Standard & Poor’s 500 Index were unchanged today. The index dropped 2.2 percent in New York yesterday after Germany failed to get bids for 35 percent of the 10-year bonds at a sale. The Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments rose to an all-time high yesterday, stoking concern the region’s debt crisis that began more than two years ago in Greece now risks engulfing Germany.

About $1 trillion has been erased from U.S. market value since Nov. 15 amid concern that Europe’s debt crisis will hamper the global economy. The U.S. market will close today for Thanksgiving and trading will end at 1 p.m. tomorrow.

The MSCI Asia Pacific Index declined 20 percent this year through yesterday, compared with a 7.6 percent drop by the S&P 500 and a 20 percent slump by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.1 times estimated earnings on average, compared with 11.7 times for the S&P 500 and 9.6 times for the Stoxx 600.

The London Metal Exchange Index of prices for six industrial metals including copper and aluminum fell 1.6 percent yesterday. The Thomson Reuters/Jefferies CRB Index of raw materials fell 1.4 percent yesterday.

--Editor: John McCluskey

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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