Bloomberg News

Japan Futures Little Changed as Fed Cuts Outlook

June 20, 2012

Japanese stock futures were little changed after the Federal Reserve cut its estimates for U.S. economic growth and expanded its Operation Twist stimulus program amid a slowdown in hiring.

American Depositary Receipts of Komatsu Ltd. (6301), a Japanese construction machinery maker, slid 0.6 percent. Olympus Corp. (7733) may be active after President Hiroyuki Sasa said the company is considering raising about 50 billion yen ($633 million) to boost capital that declined by more than half after the Japanese camera maker admitted to a 13-year accounting fraud. ADRs of Woodside Petroleum Ltd. (WPL), Australia’s second-biggest oil and gas producer, declined 0.7 percent as crude fell to an eight-month low.

Futures on Japan’s Nikkei 225 Stock Average were bid in the pre-market at 8,790 in Osaka at 8:05 a.m. local time. The gauge closed at 8,785 in Chicago yesterday. New Zealand’s NZX 50 Index recouped losses and was little changed after first-quarter gross domestic product expanded 1.1 percent, beating the average economist estimate for 0.4 percent growth. Futures on Australia’s S&P/ASX 200 Index gained 0.4 percent.

“Markets had been hoping for a little bit more from the Fed,” said Stan Shamu, a market strategist at IG Markets in Melbourne, a provider of trading services in stocks, bonds and commodities. “Sentiment has really slumped after the lower growth forecast.”

Futures on the Standard & Poor’s 500 Index fell 0.1 percent today. The gauge retreated 0.2 percent yesterday after the Fed report. The Stoxx Europe 600 Index yesterday gained 0.6 percent ahead of the Fed statement amid optimism the U.S. central bank would add to stimulus measures to spur growth.

Operation Twist

The U.S. central bank cut its estimates for growth and said it sees little progress on unemployment during the rest of the year. The Fed lowered its central tendency estimate for U.S. 2012 gross domestic product growth to 1.9 percent to 2.4 percent from 2.4 percent to 2.9 percent in April.

The Fed will expand its Operation Twist program to replace short-term bonds with longer-term debt by $267 billion through the end of 2012. That “should put downward pressure on longer- term interest rates and help to make broader financial conditions more accommodative,” the Federal Open Market Committee said.

“If we don’t see continued improvement in the labor market, we’ll be prepared to take additional steps if appropriate,” Fed Chairman Ben S. Bernanke told reporters after the FOMC’s two-day meeting. He said those steps might include additional asset purchases.

Yearly Loss

The MSCI Asia-Pacific (MXAP) lost 9.5 percent through yesterday from this year’s highest level in February amid signs global economic growth was slowing as Europe struggled to contain its debt crisis. This left the gauge trading at 1.2 times book value, compared with 2.1 times for the S&P 500 and 1.4 times for the Stoxx 600, according to data compiled by Bloomberg. A number below one means companies can be bought for less than value of their assets.

The Thomson Reuters/Jefferies CRB Index of raw materials retreated 1.6 percent yesterday. Crude oil for July delivery fell $2.23 to $81.80 a barrel on the New York Mercantile Exchange, the lowest settlement since Oct. 5. The more actively traded August contract dropped $2.90, or 3.4 percent, to $81.45.

The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese companies in New York fell 1 percent, the most since June 1, to 93.20 yesterday in New York.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

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


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