Japan, Australia Stock Futures Fall as IMF Cuts Economic Growth Estimates

Japanese stocks declined on the lowest volume in three months after Citigroup Inc. downgraded the country’s auto sector to “sell,” amid continuing supply disruptions in the wake of last month’s record earthquake

Toyota Motor Corp. (7203), Honda Motor Co., and Nissan Motor Co., the country’s top three carmakers, declined at least 2.2 percent after Citigroup cut its rating on Japan’s auto industry, saying investors haven’t priced in the impact on earnings from the earthquake and tsunami that hit on March 11. Sharp Corp. slid 0.8 percent after the electronics maker said a disruption of gas supplies forced it to suspend some production. Suruga Bank Ltd. (8358) tumbled 7.5 percent as the lender said one its borrowers has filed for bankruptcy and may be unable to repay its loans.

“Investors are reluctant to buy stocks at prices higher than the current level because it’s hard to gauge the earnings outlook for carmakers and other companies,” said Toshikazu Horiuchi, a market analyst at Cosmo Securities Co. in Tokyo.

The Nikkei 225 Stock Average fell 0.5 percent to 9,719.7, the first drop in three days, at the 3 p.m. market close in Tokyo. The Topix index slid 0.1 percent to 852.34, with about three stocks advanced for every two that declined. The total value of stocks traded on the Tokyo Stock Exchange’s first section was 1.22 trillion yen, the lowest since Jan. 5.

S&P Futures

Futures on the Standard & Poor’s 500 Index increased 0.2 percent today. In New York, the index dropped 0.4 percent to 1,328.17 on April 8 as oil’s rally to a 30-month high drove down transportation shares and investors speculated a fight in the U.S. Congress over the federal budget may shut the government for the first time since 1996.

The Nikkei 225 fell 6.4 percent through April 8 from March 10, a day before the magnitude-9 earthquake hit. Stocks in the Japanese benchmark are valued at 14.6 times estimated earnings on average, compared with 13.7 times for the S&P 500 and 11.4 times for the Stoxx Europe 600.

Carmakers fell the most among the Topix’s 33 industry groups. Toyota lost 2.4 percent to 3,260 yen and was the heaviest single drag on the index. Honda Motor Co. sank 2.2 percent to 2,903 yen, while Nissan Motor Co. fell 2.4 percent to 697 yen.

Citigroup analyst Noriyuki Matsushima cut his rating on Japan’s auto companies to “sell” from “buy” and reduced share-price estimates for the carmakers. Matsushima said total operating losses in the sector may be the biggest ever after last month’s earthquake disrupted the supply of parts and limited electricity at factories.

Sharp, Suruga Bank

Sharp retreated 0.8 percent to 771 yen. The company suspended production at two liquid-crystal display plants after the quake caused a shortage of gas used to run equipment.

Companies usually reduce output rather than halting production outright, so the stoppage was a “surprise,” Takashi Watanabe, an analyst at Goldman Sachs Group Inc. wrote in a report dated today.

Suruga Bank, plunged 7.5 percent to 680 yen, the largest drop in the Topix. The regional lender said there’s a possibility that Maruwa Shoji, a borrower that filed for bankruptcy protection, won’t repay 16.9 billion yen ($200 million) in loans. Barclays Capital cut the bank’s rating to “underweight” from “equal weight.”

Among stocks that rose, Tokyo Electric Power Co., the utility that is battling to cool nuclear reactors crippled by the tsunami in Fukushima, gained the most on the Nikkei and was the most actively traded stock in Japan. Asia’s biggest utility surged by the daily limit of 80 yen, or 19 percent, to 500 yen.

Tepco Surges

The company, whose stock price has dropped 77 percent since the reactor accident started last month, will borrow or buy at least 100 gas turbines with a combined capacity of 1 million kilowatts to increase power supply during Japan’s summer, public broadcaster NHK reported.

Kansai Electric Power Co. increased 2.4 percent to 1,858 yen after the utility agreed to buy two Griffin Energy coal-fired power stations in Western Australia. The utility will team with Japanese trading house Sumitomo Corp. to make the purchase.

Mining and energy-related companies also rose. Inpex Corp., Japan’s largest energy explorer, climbed 3 percent to 654,000 yen. Japan Petroleum Exploration Co. (1662), the second-biggest oil driller, advanced 1.7 percent to 4,155 yen.

Crude oil for May delivery rose 2.3 percent to $112.79 a barrel in New York on April 8, the highest settlement since Sept. 22, 2008. Oil advanced for a fourth day as the North Atlantic Treaty Organization escalated its air campaign over Libya and on concern unrest may spread to other energy-exporting countries in the Middle East.

To contact the reporters on this story: Akiko Ikeda in Tokyo at iakiko@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.

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