Bloomberg News

Japanese, Australian Stock Futures Rise on China, Draghi

July 26, 2012

Japanese and Australian stock futures rose as Chinese cities roll out stimulus measures amid an economic slowdown and after European Central Bank President Mario Draghi said policy makers will do whatever is needed to preserve the euro.

American depositary receipts of BHP Billiton Ltd. (BHP), Australia’s biggest mining company and oil producer, rose 0.8 percent from the closing share price in Sydney. ADRs of Japanese machinery maker Komatsu Ltd. (6301), which gets 24 percent of its sales in China and Europe, advanced 2 percent. Those of Nissan Motor Co. (7201), Japan’s second-largest carmaker by revenue, fell 0.6 percent after profit missed analysts’ estimates.

Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring in September closed at 8,530 in Chicago yesterday, up from 8,440 in Osaka, Japan. They were bid in the pre-market at 8,530 in Osaka at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index added 0.9 percent today. New Zealand’s NZX 50 Index gained 0.6 percent in Wellington.

Draghi “came out with a very strong statement in support of the market,”said Cameron Peacock, a Melbourne-based market analyst at IG Markets, a provider of trading services for stocks, bonds and currencies. In China, “there’s scope for them to re-stimulate the economy, but they’ve got to do that in such a way that it doesn’t re-stoke inflation beyond a certain point.”

China Stimulus

The central Chinese city of Changsha unveiled an 829.2 billion yuan ($130 billion) investment plan, the official China News Service reported yesterday. Local governments are stepping up efforts to bolster the economy, with the cities of Nanjing and Ningbo saying over the past two weeks they will introduce measures including tax cuts and incentives to boost consumption.

The Bloomberg China-US Equity Index of the most-traded Chinese shares in the U.S. gained 1.9 percent to 85.94 in New York yesterday.

Futures on the Standard & Poor’s 500 Index were little changed today. The index added 1.7 percent in New York yesterday. Global stocks rallied after Draghi suggested policy makers may intervene in bond markets as yields surge in Spain and Italy.

Oil advanced following Draghi’s comments, as U.S. reports on durable goods and jobless claims reduced concern that economic growth is slowing. Crude for September delivery rose 42 cents to settle at $89.39 a barrel on the New York Mercantile Exchange.

Japan CPI

In Japan, the government is scheduled to report data on consumer prices and retail sales today before the stock market opens at 9 a.m. local time.

Nissan Motor Co. reported first-quarter profit that fell short of analysts’ estimates as it increased incentives and marketing spending in the U.S. Net income dropped 15 percent to 72.3 billion yen ($924 million) in the three months ended June 30, from 85 billion yen a year earlier, Nissan said yesterday.

The MSCI Asia Pacific Index (MXAP) fell about 12 percent from this year’s high on Feb. 29 through yesterday amid concern China’s economy is slowing and Europe’s sovereign-debt crisis will worsen. The regional benchmark index traded at 11.6 times estimated earnings as of yesterday, compared with 13.2 for the Standard & Poor’s 500 Index (SPXL1) and 10.9 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

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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