Bloomberg News

Australian Stocks Fall on Fed Minutes; Japanese Futures Rise

January 03, 2013

Australian stocks fell after Federal Reserve policy makers said they will probably end their $85 billion monthly bond-purchase program sometime this year. Japanese equity futures rose ahead of markets reopening today.

BHP Billiton Ltd., the world’s largest mining companies, dropped 1.1 percent, as metals prices fell. American Depositary Receipts of Toyota Motor Corp. surged 4.2 percent from the most recent closing price as Japan’s equity markets reopen today after holidays. Japan Exchange Group will start trading after the merger between Osaka Securities Exchange Co. and Tokyo Stock Exchange Group.

Australia’s S&P/ASX 200 Index (AS51) declined 0.3 percent to 4,727.90 as of 10:11 a.m. in Sydney, retreating from yesterday’s highest level since May 2011. Nikkei 225 Stock Average (NKY) futures were bid in the pre-market at 10,650 in Osaka today. That’s 2.5 percent higher than their most recent close of 10,390 on Dec. 28, according data compiled by Bloomberg. Markets also repoen today in China.

“The central concern to come out of the Fed minutes is a call to wind back bond buying,” said Evan Lucas, Melbourne- based market strategist at IG Markets Ltd., a provider of trading services in equities, currencies and commodities. “This takes some of the steam from the market that we’ve seen recently.”

Four years after cutting the main interest rate to near zero, U.S. policy makers have been expanding their third round of so-called quantitative easing to boost economic growth and cut the jobless rate, now at 7.7 percent.

Fed Minutes

Fed minutes, released yesterday in Washington, show a divide among FOMC participants on how long bond purchases should last. Participants who provided estimates were “approximately evenly divided” between those who said it would be appropriate to end the purchases around mid-2013 and those who said they should continue beyond that date.

Japanese equities begin the first day of trading for 2013. The benchmark Nikkei 225 Stock Average rose 23 percent last year, accelerating in December as the pro-stimulus Liberal Democratic Party won a general election, boosting optimism that Japan’s new leaders will do more to fight deflation and spur the economy. The yen traded at the weakest level against the dollar since July 2010 today, bolstering the nation’s exporters, amid speculation new Prime Minister Shinzo Abe will push the central bank to increase cash infusions.

Chinese Markets

Investors in mainland China, where the local equity market reopens today after a holiday, will join those in Japan having their first opportunity to trade following this week’s deal to avoid the so-called fiscal cliff in the U.S.

Global equities have climbed in 2013 as U.S. lawmakers passed a bill averting spending cuts and tax increases scheduled to come into effect this year. The Standard & Poor’s 500 Index (SPX) yesterday climbed within one point of its highest closing level in five years before retreating. Futures on the S&P 500 were little changed today.

The London Metals Exchange Index of six industrial metals sank 1.2 percent yesterday.

The Hang Seng China Enterprises Index (HSCEI) of mainland Chinese firms trading in Hong Kong has climbed 4.8 percent in Hong Kong during the past two days, while the Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in New York rose 2.2 percent, as data from manufacturing to service-sector growth signaled the world’s second-biggest economy is rebounding from its seven-quarter slowdown.

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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