Bloomberg News

Japanese Stock Futures Drop as Europe Adds to Growth Concern

February 21, 2013

Japanese stock futures fell, signaling Asian equities may extend yesterday’s slump, as data out of Europe added to concern the region’s recession is weighing on the global economy. Australian shares opened higher.

American depositary receipts of Canon Inc. (7751), a camera maker that gets 30 percent of its revenue in Europe, slid 0.8 percent from the closing share price in Tokyo. Billabong International Ltd., a global surfwear maker, fell 3.9 percent in Sydney after reporting a record loss. BHP Billiton Ltd. (BHP), Australia’s biggest oil producer, dropped 0.6 percent as crude fell to the lowest level this year. Commonwealth Bank of Australia, the nation’s largest lender, rose 1.1 percent as central bank Governor Glenn Stevens said recent interest-rate cuts should be given time to do their work.

Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring in March closed at 11,270 in Chicago yesterday, down from 11,320 in Osaka, Japan. They were bid in the pre-market at 11,260 in Osaka at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index rebounded 0.9 percent today after falling yesterday by the most since May. New Zealand’s NZX 50 Index added 0.3 percent in Wellington.

“Europe still remains in a recession, and I don’t know why anyone thought it was starting to grow,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has $126 billion under management. “In Asia, it’s one of those days when investors sit on the sidelines and alternatively, if they missed out on a rally, this is an opportunity to buy stocks at better prices in a pullback in the market.”

Fed Stimulus

Global stocks tumbled yesterday by the most since November and commodities fell as a report signaled the euro-area’s economy contracted more than forecast and concern grew that the U.S. Federal Reserve may slow the pace of stimulus.

Futures on the Standard & Poor’s 500 Index (SPXL1) gained 0.1 percent today. The index declined 0.6 percent in New York yesterday. The Federal Reserve’s Bank of St. Louis President James Bullard said U.S. unemployment rate may drop to 6.5 percent by the middle of next year and prompt the central bank to raise its benchmark interest rate from near zero.

In Europe, the Stoxx Europe 600 Index sank 1.5 percent, its biggest tumble since Feb. 4, as euro-area services and manufacturing shrank in February by more than economists had forecast.

Relative Value

Asian stocks plunged yesterday, with the MSCI Asia Pacific Index losing 1.5 percent, amid concern the Fed may scale back U.S. stimulus and as China ordered increased property curbs. Asia’s benchmark traded at 14.8 times estimated earnings compared with 13.6 for the S&P 500 Index and 12.2 for the Stoxx Europe 600, according to data compiled by Bloomberg.

West Texas Intermediate oil for April delivery dropped $2.38 to $92.84 a barrel on the New York Mercantile Exchange, the lowest settlement since Dec. 31.

The Bloomberg China-US Equity Index fell 1.2 percent to 93.28 yesterday, falling for a fifth day in the longest stretch of declines since September. The Shanghai Composite Index slumped 3 percent yesterday, capping the biggest drop since November 2011, amid concern China will step up property curbs.

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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