Bloomberg News

Japan Stock Futures Fall as Rating Cut Heightens Europe Concern

November 27, 2011

Nov. 28 (Bloomberg) -- Japanese stock futures fell after Belgium’s credit rating was cut and reports that Greece is demanding private investors accept larger losses on their debt. Australian shares rose as oil prices gained.

American depositary receipts of Mizuho Financial Group Inc., Japan’s third-largest bank by market value, sank 3.1 percent from the closing share price in Tokyo on Nov. 25. Those of Komatsu Ltd., a construction machinery maker that counts China as its fastest-growing market, lost 1.1 percent as profit growth slowed at Chinese industrial companies. BHP Billiton Ltd., Australia’s biggest oil producer, rose 1.5 percent in Sydney as crude prices gained.

“The European situations remains severe,” said Kenichi Hirano, general manager and strategist at Tachibana Securities Co. in Tokyo.

Futures on Japan’s Nikkei 225 Stock Average expiring in December closed at 8,120 in Chicago on Nov. 25, compared with 8,180 in Osaka, Japan. The contracts were bid in the pre-market at 8,140 in Osaka at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index gained 0.6 percent today. New Zealand’s NZX 50 Index rose 0.2 percent in Wellington after a weekend election saw Prime Minister John Key’s National Party returned to power.

German Debt Sale

Futures on the Standard & Poor’s 500 Index rose 1.8 percent today, indicating the gauge will end a seven-day losing streak, amid optimism the International Monetary Fund may help Italy after the nation’s borrowing costs surged. The IMF is preparing a 600 billion euro ($794 billion) loan for Italy in case the country’s debt crisis worsens, La Stampa reported, without saying where it got the information.

The S&P 500 Index dropped 0.3 percent in New York on Nov. 25. Stocks reversed gains as Reuters reported that Greece is demanding that new bonds issued to investors as part of a debt swap have a net present value of 25 percent, lower than the “high 40s the banks have in mind.”

Belgium’s credit rating was cut one step to AA by S&P, which said bank guarantees, political instability and slowing economic growth will make it difficult to reduce the nation’s debt load.

In China, industrial companies’ profit growth cooled, adding to signs of a slowdown in the world’s second-biggest economy that may encourage Premier Wen Jiabao to ease policies.

Net income climbed 25.3 percent in the first 10 months of 2011 from a year earlier to 4.12 trillion yuan ($646 billion), the statistics bureau said on its website yesterday. That was less than the 27 percent gain for January-through-September. October profits rose only 12.5 percent, the bureau said.

The MSCI Asia Pacific Index declined 21 percent this year through Nov. 25, compared with a 7.9 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 9.7 times for the Stoxx 600.

Crude oil for January delivery gained 0.6 percent to settle at $96.77 a barrel in New York on Nov. 26.

--Editor: John McCluskey

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Masaaki Iwamoto in Tokyo at miwamoto4@bloomberg.net

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


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