Japan Stock Futures, Australian Shares Drop on Euro Downgrades
Japanese stock futures and Australian equities fell after Standard & Poor’s stripped France of its top credit rating and cut eight other euro-zone nations, boosting concern the region’s debt crisis may worsen.
American depositary receipts of Mitsubishi UFJ Financial Group Inc. (8306), Japan’s top publicly traded bank, fell 1.2 percent from the closing share price in Tokyo. Those of Kyocera Corp. (6971), an electronics maker that gets almost 20 percent of its sales in Europe, slid 0.7 percent. BHP Billiton Ltd. (BHP), Australia’s No. 1 oil producer and the world’s biggest mining company by market value, slipped 1.1 percent in Sydney after commodity prices dropped.
Futures on Japan’s Nikkei 225 Stock Average expiring in March closed at 8,460 in Chicago on Jan. 13, up from 8,500 in Osaka, Japan. They were bid in the pre-market at 8,430 in Osaka at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index fell 1 percent today. New Zealand’s NZX 50 Index lost 0.2 percent in Wellington.
“People in the market has been expecting downgrades of France and other European countries, but they can’t tell how much the downgrades have already been priced in, which will likely drag down stocks” said Norihiko Funatsu, a chief strategist in Tokyo at Okasan Securities Co.
Futures on the Standard & Poor’s 500 Index slid 0.3 percent today. The index lost 0.5 percent in New York on Jan. 13. After the market closed, S&P said France was downgraded, while Germany had its credit rating affirmed.
‘No Breakthrough’
Germany, Belgium, Estonia, Finland, Ireland, Luxembourg and the Netherlands had their ratings affirmed by S&P as France lost its AAA rating. France was cut to AA+ and the rating has a negative outlook, S&P said in a statement. Cyprus, Italy, Portugal and Spain were cut two grades, S&P said. The long-term ratings on Austria, Malta, Slovakia and Slovenia were cut one level.
Attempts by European leaders to address economic woes haven’t “produced a breakthrough of sufficient size and scope to fully address the euro zone’s financial problems,” S&P said. The region continues to face tightening credit conditions among other problems, S&P said.
The euro weakened for a second day, reaching an 11-year low versus the yen. The shared currency depreciated to 97.20 yen on Jan. 14, which matched its lowest level since December 2000.
Concern about potential downgrades overshadowed data showing that confidence among U.S. consumers rose more than forecast in January to the highest level in eight months, a sign household spending may hold up early this year. Separate figures showed that the U.S. trade deficit widened more than forecast in November as American exports declined and companies stepped up imports of crude oil and automobiles.
Oil Falls
Crude oil for February delivery fell 0.4 percent to $98.70 a barrel in New York on Jan. 13, the lowest settlement since Dec. 21. The London Metal Exchange Index of prices for six metals including copper and aluminum lost 0.3 percent, its first drop since Jan. 5.
The Bloomberg China-US 55 Index of the most-actively traded Chinese equities slipped 0.7 percent to 99.61 on Jan. 13. China’s economy probably grew the least in 10 quarters in the last three months of 2011 and may cool further as export demand slumps and officials prolong a campaign against property bubbles.
Gross domestic product, the value of all goods and services produced, rose 8.7 percent from a year earlier, the slowest pace since the second quarter of 2009, according to the median forecast of 26 economists surveyed by Bloomberg News. The data, plus indicators for investment, retail sales and industrial production, are scheduled to be released tomorrow in Beijing.
The MSCI Asia Pacific Index (MXAP) advanced 2.7 percent this year through Jan. 13, compared with a 2.5 percent gain by the S&P 500 and a 1.9 percent increase by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.3 times estimated earnings on average, compared with 12.3 times for the S&P 500 and 10 times for the Stoxx 600.
In Japan, the government is scheduled to release a report on machinery orders at 8:50 a.m. in Tokyo.
To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@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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