Bloomberg News

Japan, Australian Stock Futures Rise on ECB Bond Buying

September 05, 2012

Japanese and Australian stock futures rose on speculation European Central Bank President Mario Draghi today will announce unlimited bond purchases to tame the region’s sovereign-debt crisis.

American depositary receipts of camera maker Canon Inc. (7751), which gets 31 percent of its revenue in Europe, gained 0.7 percent from the closing share price in Tokyo. Those of Mizuho Financial Group Inc. (8411), Japan’s third-largest bank by market value, added 0.2 percent. Shares of Lynas Corp. may be active in Sydney after it said Malaysia issued a temporary operating license for a rare-earths refinery.

Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring in September closed at 8,695 in Chicago yesterday compared with 8,670 in Osaka, Japan. They were bid in the pre-market at 8,700 in Osaka at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index gained 0.3 percent today. New Zealand’s NZX 50 Index added 0.1 percent in Wellington.

“Europe has been a source of tail risk for markets for the last two years,” said Prasad Patkar, a portfolio manager who helps manage about $1 billion at Platypus Asset Management Ltd. in Sydney. “If that risk is addressed in a credible manner, the scene could be set for a relief rally in risk assets.”

The MSCI Asia Pacific Index (MXAP) fell 1.2 percent this quarter through yesterday as signs of a global economic slowdown overshadowed expectations for further stimulus measures. The Asian benchmark traded at 12.1 times estimated earnings, compared with 13.6 times for the Standard & Poor’s 500 Index and 11.6 times for the Stoxx Europe 600 Index.

U.S. Market

Futures on the Standard & Poor’s 500 Index (SPXL1) were little changed today. The index fell 0.1 percent in New York yesterday as London-based Markit Economics said euro-area services and manufacturing contracted more than initially estimated in August.

In Australia, data today is forecast to show hiring slowed and the jobless rate rose in August.

Investors are also awaiting the European Central Bank’s decision on its bond-purchase program today.Draghi’s proposal involves unlimited purchases of government debt that will be sterilized to assuage concerns about printing money, two central bank officials briefed on the plan said. To sterilize the bond purchases, the ECB will remove from the system elsewhere the same amount of money it spends, ensuring the program has a neutral impact on the money supply.

The Bloomberg China-US Equity Index of the most-traded Chinese shares in the U.S. dropped 1 percent to 86.29 at the close of trading in New York yesterday, its fifth straight daily loss and the longest string of declines since May 18.

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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