Japanese Stock Futures Little Changed on Yen, Overheating Signs

Japanese stock futures were little changed as the yen’s drop to an 11-month low against the dollar buoyed the earnings prospects for exporters, while a technical indicator showed the nation’s shares have risen too fast after the benchmark index hit an eight-month high yesterday.

American depositary receipts of Honda Motor Co. (7267), Japan’s second-largest carmaker by market value, rose 0.3 percent from the closing share price in Tokyo. ADRs of Sharp Corp. (6753), a Japanese electronics maker, slid 4 percent as it named its new president after forecasting a record annual loss. Newcrest Mining Ltd. (NCM), Australia’s biggest gold producer, led stocks lower in Sydney, dropping 3.2 percent after gold prices tumbled.

Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring in June closed at 10,030 in Chicago yesterday, compared with 10,010 in Osaka, Japan. They were bid in the pre-market at 10,020 in Osaka at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index fell 0.3 percent today. New Zealand’s NZX 50 Index gained 0.9 percent in Wellington.

“Perhaps we are seeing a sustained devaluation of the yen, which would improve the outlook for Japanese exporters in particular,” said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “Perhaps what we are seeing is a redirection of asset allocation toward Japan because a lot of fund managers are underweight, and that’s pushed up the market very quickly ahead of fundamentals.”

Yen, Exporters

The yen reached 83.83 per dollar yesterday, the lowest level since April 14. A weaker yen boosts the value of Japanese exporters’ profits overseas when repatriated.

The 14-day relative strength index for the Nikkei 225 rose to about 77 yesterday, above the 70 threshold that some traders say signals shares have been overbought and may fall.

Futures on the Standard & Poor’s 500 Index (SPXL1) fell 0.1 percent today. The index lost 0.1 percent in New York yesterday, snapping a five-day advance that drove the benchmark gauge for U.S. equities to the highest level since June 2008.

Concern that stock gains have outpaced economic prospects rose as the S&P 500 capped the best start to a year since 1991, amid better-than-estimated economic data and corporate earnings.

Gold futures for April delivery retreated 3 percent to settle at $1,642.90 an ounce on the Comex in New York, the biggest drop since Feb. 29. Earlier, prices slumped to $1,639.20, the lowest since Jan. 17.

The MSCI Asia Pacific Index (MXAP) rose 11.8 percent this year through yesterday, compared with a 10.9 percent gain by the S&P 500 and a 10.5 percent advance by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 14.9 times estimated earnings on average, compared with 13.4 times for the S&P 500 and 11.2 times for the Stoxx 600.

The Bloomberg China-US 55 Index of Chinese U.S.-listed shares fell 2.3 percent to 104.25 yesterday in New York.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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

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