Japan, Australia Stock Futures Fall as U.S. Home Sales Fuel Growth Concern
Aug. 24 (Bloomberg) -- Shaun Osborne, chief currency strategist at TD Securities Inc., talks with Bloomberg's Julie Hyman about the outlook for Japan's yen. The yen advanced to the strongest in 15 years versus the dollar and to its highest level against the euro since 2001 even after Prime Minister Naoto Kan told reporters “steep currency gains are undesirable.” (Source: Bloomberg)
Japanese and Australian stock futures fell as a record plunge in U.S. home sales added to evidence the global economy is faltering.
American depositary receipts of Honda Motor Co., which receives 84 percent of its revenue abroad, closed 2.3 percent down from its Tokyo close yesterday. Those of Sony Corp., the world’s third-biggest television maker, fell 1.7 percent as the yen’s appreciation against the dollar threatened to hurt export earnings. ADRs of BHP Billion Ltd., the world’s largest mining company, declined 1.4 percent from the Sydney close as oil and metal prices dropped.
“With the U.S. at the focus, there’s increasing uncertainty about the future of the global economic recovery,” said Hiroichi Nishi, an equities manager in Tokyo at Nikko Cordial Securities Inc. “Stocks are falling, the yen is rising and there is no end to this risk aversion we’re seeing now.”
Yen-denominated futures on Japan’s Nikkei 225 Stock Average expiring in September closed at 8,850 in Chicago yesterday, 1.3 percent lower than 8,970 in Osaka. They were bid in the pre- market at 8,860 as of 8:05 a.m. in Osaka. The Nikkei 225 closed at 8,995.14 yesterday, more than 20 percent below its 18-month high on April 5, the level some analysts regard as a bear market.
Futures on Australia’s S&P/ASX 200 Index fell 1.3 percent. New Zealand’s NZX 50 Index slipped 0.2 percent.
The MSCI Asia Pacific Index declined 0.5 percent yesterday on speculation the U.S. housing data would provide more evidence the world’s largest economy is faltering. The decline cut the average price of shares in the gauge to 13.7 times estimated earnings, compared with 12.6 times for the S&P 500 and 11.2 times for the Stoxx Europe 600 Index.
U.S. Home Sales Plunge
Futures on the Standard & Poor’s 500 Index slipped 0.1 percent. The gauge sank to a seven-week low yesterday following the drop in home sales.
Purchases of existing houses plunged by a record 27 percent in July to a 3.83 million annual pace, the lowest in a decade of record keeping and worse than the most pessimistic forecast of economists surveyed by Bloomberg News, figures from the National Association of Realtors showed.
Japanese export stocks may be active after the yen appreciated to as much as 83.90 against the dollar today, compared with 84.97 at the close of stock trading in Tokyo yesterday. Against the euro, it rose to as much as 105.92 from 107.41. A stronger yen reduces overseas income at Japanese companies converted into their home currency.
Government Intervention
The yen climbed to a 15-year high against the dollar yesterday and is on course for its strongest annual average level since currencies began trading freely in 1971, according to data compiled by Bloomberg and based on each day’s close.
The Ministry of Finance may consider currency intervention if speculators drive up the currency by several yen in a day, Nikkei English News reported today, without saying where it had obtained the information. Japanese Prime Minister Naoto Kan yesterday said “steep currency moves are undesirable.”
Commodity producers may be active after crude oil futures fell 2 percent in New York yesterday. The London Metal Exchange Index of six metals including copper and zinc slumped 1.6 percent, dropping to the lowest level since July 27.
To contact the reporters on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net; Satoshi Kawano in Tokyo at skawano1@bloomberg.net.
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