Japanese stock futures retreated after a magnitude 7.1 earthquake hit the country less than a month following the nation’s worst temblor on record. Australian stock futures fell.
American depositary receipts of Sony Corp. (6758), Japan’s biggest exporter of electronics, slipped 0.8 percent in New York. Those of Canon Inc. (7751), the world’s largest maker of cameras, fell 0.5 percent. ADRs of Sharp Corp., Japan’s largest maker of solar panels, lost 1.2 percent. Futures on Australia’s S&P/ASX 200 Index slipped 0.1 percent today and New Zealand’s NZX 50 Index was little changed in Wellington.
Yen-denominated futures on Japan’s Nikkei 225 Stock Average expiring in June closed at 9,505 in Chicago yesterday, compared with 9,590 in Osaka, Japan and 9,595 in Singapore. The iShares MSCI Japan Index Fund (EWJ), an exchange-traded security tracking the nation’s equities, lost 0.8 percent to $9.79 in U.S. trading. The Bank of New York Mellon Japan ADR Index fell 0.2 percent in New York yesterday and has plunged 12 percent since March 10, the day before Japan was hit by a magnitude-9 earthquake and tsunami.
“The concern is further disruptions to the economic base of Japan,” said Martin Schulz, who manages $360 million of international equities as a senior portfolio manager at PNC Capital Advisors LLC in Cleveland. The March 11 quake “not only affected the local economy, but also the supply chain of some of the companies that are leaders in the technology industry. The concern is how it’d further affect those companies.”
March 11 Quake
The Nikkei 225 (NKY) posted its biggest two-day plunge since the 1987 crash on March 14 and March 15 after the quake and tsunami on March 11 killed or left missing more than 27,000 people and prompted radiation leaks at Tokyo Electric Power Co.’s Fukushima nuclear power plant. The benchmark gauge has fallen 8.1 percent since March 10.
The 7.1-magnitude earthquake minutes before midnight yesterday spared the Fukushima plant, although workers struggling to cool radioactive fuel were evacuated, Tepco said, based on its initial assessment. The aftershock was the second- strongest since the March 11 quake. No unusual conditions were observed at the plant afterward, the utility and Japan’s Nuclear and Industrial Safety Agency said in statements.
Sony slipped 0.8 percent in the U.S. to $30.33 in New York. Canon fell 0.5 percent to $42.57.
The yen strengthened on speculation traders will reduce investments in higher-yielding assets funded by the currency after last night’s aftershock.
The Japanese currency rose against all 15 of 16 of its most-traded counterparts except the Brazilian franc. The yen gained to 84.98 against the dollar today, from 85.20 per dollar at the close of stock trading in Tokyo yesterday. A stronger yen versus the dollar cuts the value of U.S. income at Japanese companies when repatriated.
“Even though it appears there wasn’t that much damage from last night’s aftershock, it’ll lead to investors holding back,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc. “Exporters are likely to be sold as there seems to be a pause in the weakening yen.”
The MSCI Asia Pacific Index lost 1.7 percent this year through yesterday, compared with gains of 6 percent by the S&P 500 and 1.8 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13.2 times estimated earnings on average, compared with 13.7 times for the S&P 500 and 11.3 times for the Stoxx 600.