Stock futures in Japan and Australia declined after the Bank of Japan kept monetary policy unchanged, raising concern central banks from Tokyo to Washington are increasingly reluctant to add more stimulus to boost their economies.
American Depositary Receipts of Toyota Motor Corp. retreated 3.6 percent after the yen rose the most against the dollar in three years, weakening the earnings outlook at the world’s largest carmaker. ADRs of BHP Billiton Ltd. (BHP), the biggest global miner, sank 0.4 percent as metals prices declined.
Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring this month closed at 12,980 in Chicago, down from 13,380 at the end of trading in Osaka. They were bid in the pre-market at 13,000 in Osaka at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index retreated 0.8 percent and New Zealand’s NZX 50 Index fell 0.2 percent. Markets in China, Hong Kong, Taiwan and the Philippines are closed for holidays.
“There’s lots of confusion around the world at present about what central bank policy means for the outlook of the global economy, earnings and valuations,” said Matthew Sherwood, Sydney-based head of investment market research at Perpetual Ltd., which manages about $25 billion. “The Federal Reserve is likely to continue to be ambiguous about its next step, probably because it’s not sure. In this way, they will try to play both sides and talk about the need to continue to support the economy and the need to not repeat past mistakes of supporting it for too long. This will see markets continue to be volatile.”
Japan’s Topix index dropped 1 percent yesterday after the central bank refrained from extending the maturity of loans to lenders it uses to smooth bond-market volatility, bucking economists’ predictions. Policy makers stuck with an April pledge to increase the monetary base by 60 trillion to 70 trillion yen ($611 billion to $713 billion) per year. The BOJ today delivers its monthly economic assessment for June.
Futures on the Standard & Poor’s 500 Index were little changed, following yesterday’s 1 percent loss. Stimulus from the Fed and better-than-estimated corporate earnings have propelled the U.S. bull market into a fifth year and driven the S&P 500 up 140 percent from a 12-year low in 2009. The index has fallen 2.6 percent from its record high on May 21, the day before Fed Chairman Ben S. Bernanke suggested the central bank could curtail its $85 billion monthly bond purchases if the economy improved in a “real and sustainable way.”
The Thomson Reuters/Jefferies CRB Commodity Index sank 0.5 percent, declining a second day, in New York yesterday.
Futures on Hong Kong’s Hang Seng Index slid 0.6 percent and contracts on the Hang Seng China Enterprises Index of mainland Chinese companies trading in Hong Kong retreated 0.8 percent. The Bloomberg China-US Equity Index of the most-traded Chinese shares in the U.S. dropped 1.4 percent in New York yesterday.
The MSCI Asia Pacific Index, the benchmark regional equities gauge, fell 8.9 percent through yesterday from this year’s high on May 20 on speculation that a strengthening U.S. economy will lead the Fed to scale back record stimulus. That left the measure yesterday trading at 12.8 times average estimated earnings, compared with 14.8 for the Standard & Poor’s 500 Index (SPX) and 12.9 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
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