Japanese and Australian stock futures were little changed after U.S. retail sales dropped and the yen rose to a one-month high against the dollar, offsetting investor optimism that China may take further steps to boost its economy amid a global slowdown.
American depositary receipts of machinery maker Komatsu Ltd. (6301), which gets 14 percent of its sales in China, rose 0.4 percent from the closing share price in Tokyo. ADRs of Sony Corp. (6758), Japan’s No. 1 exporter of consumer electronics, lost 0.4 percent. Those of BHP Billiton Ltd. (BHP), Australia’s biggest mining company and oil producer, fell 0.4 percent after JPMorgan Chase & Co. said it prefers rival Rio Tinto Group. (RIO)
Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring in September were bid in the pre-market at 8,740 in Osaka at 8:05 a.m. local time after closing at 8,800 in Chicago on July 13. Japan’s equity markets were closed yesterday for a public holiday. Futures on Australia’s S&P/ASX 200 Index were little changed today. New Zealand’s NZX 50 Index was little changed in Wellington.
“As tightening measures have slowed China’s growth, the market’s focus is shifting to stimulus measures such as an interest-rate cut,” said Koichi Kurose, chief economist in Tokyo at Resona Bank Ltd., which oversees about 15 trillion yen ($190 billion). “One thing to remember is that the yen is on the rise. Japan’s equities are sensitive to the yen’s level, which is likely to put a lid on the market.”
Premier Wen said momentum for a recovery in Chinese economic growth isn’t yet in place and that “difficulties” may persist for a while, the official Xinhua News Agency reported on July 15. The government will step up policy fine-tuning in the second half of this year to support growth, Wen said, reiterating comments he made during a visit to eastern Jiangsu province earlier this month. The comments drove a 0.4 percent increase yesterday in the MSCI Asia Pacific Index.
Futures on the Standard & Poor’s 500 Index (SPXL1) fell less than 0.1 percent today. The index lost 0.2 percent in New York yesterday after U.S. retail sales unexpectedly dropped 0.5 percent in June.
The yen reached 78.69 against the dollar yesterday, the strongest level since June 18. A stronger yen reduces the value of overseas earnings for Japanese exporters when repatriated.
Shares also fell after the International Monetary Fund cut its global economic growth forecast as Europe’s debt crisis prolongs Spain’s recession and slows expansions in emerging markets.
Growth worldwide will be 3.9 percent next year, less than the 4.1 percent estimate in April, the IMF predicted in an update of its World Economic Outlook.
The MSCI Asia Pacific Index rose 1.7 percent this year through yesterday, compared with a 7.6 percent gain by the S&P 500 and a 5 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 10.8 times for the Stoxx 600.
The Bloomberg China-US Equity Index of the most-traded Chinese shares in New York lost 1.4 percent to 86.55 yesterday, the lowest level since Oct 5.
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