Bloomberg News

Japanese Stock Futures Rise as ECB May Consider Rate Cut

July 09, 2012

Japanese and Australian stock futures advanced after European Central Bank President Mario Draghi signaled policy makers may be open to another interest- rate cut. Gains may be limited as rising borrowing costs in Spain stoked concern about Europe’s debt crisis.

American depositary receipts of Kyocera Corp. (6971), which gets 17 percent of its revenue in Europe, rose 0.6 percent from the closing share price in Tokyo. Those of Alumina Ltd., an Australian resource company, climbed 1.6 percent after industry bellwether Alcoa Inc. reported better-than-expected profit, opening U.S. earnings season. Shares of Japan Prime Realty Investment Corp. may be active after announcing a share-sale plan.

Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring in September closed at 8,920 in Chicago yesterday, up from 8,880 in Osaka, Japan. They were bid in the pre-market at 8,910 in Osaka at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index added 0.1 percent today. New Zealand’s NZX 50 Index lost 0.2 percent in Wellington.

In Europe, “they come out with nice, encouraging things, and the market has a bit of rally,” said Matt Riordan, who helps manage about $6.5 billion in Sydney at Paradice Investment Management Pty. “Then, immediately it becomes clear that there’s a long-term frame and you tend to find disagreements among different countries.”

Spanish Yields

Futures on the Standard & Poor’s 500 Index (SPXL1) slid 0.2 percent today. The index fell 0.2 percent in New York yesterday after the yield on Spain’s 10-year bond rose above the 7 percent threshold that prompted bailouts in Greece, Ireland and Portugal. German Finance Minister Wolfgang Schaeuble dismissed a rapid move toward direct bank recapitalization by the European rescue fund, limiting the tools for shoring up Spanish banks.

The ECB last week cut its main interest rates by 25 basis points, taking the benchmark to a record low of 0.75 percent and the deposit rate to zero. Policy makers next review borrowing costs on Aug. 2.

“We have to look at what the situation is, the data and the developments, and then we will make up our minds on the Governing Council what to do,” Draghi told lawmakers in Brussels yesterday when asked if the central bank could cut rates again.

Alcoa, the largest U.S. aluminum producer, said profit excluding a charge related a proposed settlement of Aluminium Bahrain BSC’s lawsuit and other items was 6 cents a share, compared with the 5 cent average of 19 estimates compiled by Bloomberg. Sales fell 9.4 percent to $5.96 billion from $6.59 billion, exceeding the $5.81 billion average of 11 estimates.

Share Sale

Japan Prime Realty, a real-estate investment trust, said it plans to raise as much as 22 billion yen ($276 million) in a share sale to finance a property acquisition and repay debt.

The MSCI Asia Pacific Index (MXAP) gained 2.6 percent this year through yesterday, compared with a 7.5 percent advance by the S&P 500 and a 3.7 percent increase by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 11.8 times estimated earnings on average, compared with 13 times for the S&P 500 and 10.6 times for the Stoxx 600.

Chinese stocks traded in the U.S. fell after a report yesterday showed inflation eased to the lowest since January 2010. The Bloomberg China-US Equity Index of the most-traded Chinese companies in New York dropped 1.7 percent to 89.55, the most since June 25.

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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