Japan Stock Futures Drop as Europe Manufacturing Shrinks

Japanese stock futures and Australian equities dropped after manufacturing contracted more than economists forecast in the euro-area, dimming the outlook for global economic growth and Asian exports.

American depositary receipts of Canon Inc., a Japanese camera maker that depends on Europe for almost a third of its sales, fell 1.3 percent from the closing share price in Tokyo. Those of Nissan Motor Co. (7201), a carmaker that gets about 80 percent of its revenue overseas, lost 2 percent after the yen rose, damping the exporter’s earnings outlook. BHP Billiton Ltd., Australia’s top oil producer and the world’s No. 1 miner, slid 1.8 percent in Sydney after oil and metals prices declined.

Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring in June closed at 9,935 in Chicago yesterday, compared with 10,040 in Osaka, Japan. They were bid in the pre-market at 9,940 in Osaka at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index fell 0.7 percent today in Sydney. New Zealand’s NZX 50 Index slipped 0.2 percent in Wellington.

“Weak economic data will correct the markets, which had have too confident,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc. “Europe’s real economy is squeezed by the financial institutions’ credit crunch and is expected to have negative economic growth this year.”

Futures on the Standard & Poor’s 500 Index (SPXL1) were little changed today. The gauge lost 0.7 percent in New York yesterday as a report showing manufacturing contracted in Europe added to pessimism about the global economic outlook after an earlier index showed China manufacturing also shrank.

U.S. Jobs

U.S. stocks fell even after a report showed American jobless claims dropped to the lowest level in four years, reinforcing signs the labor market is picking up.

In Europe, a euro-area composite index based on a survey of purchasing managers in both industries dropped to 48.7 from 49.3 in February, London-based Markit Economics said in an initial estimate yesterday. Economists forecast a gain to 49.6. A reading below 50 indicates contraction.

The Japanese currency rose against all of its 16 most- traded peers tracked by Bloomberg. The yen appreciated to as high as 108.49 against the euro today in Tokyo, compared with 110.44 at the close of stock trading yesterday. Against the dollar, Japan’s currency strengthened to 82.33 from 83.39. A stronger yen cuts the value of overseas income at Japanese companies when repatriated.

Oil, Metals

Crude oil for May delivery fell 1.8 percent to settle at $105.35 a barrel yesterday in New York, the lowest settlement since March 15. The London Metal Exchange Index of prices for six industrial commodities including copper and aluminum sank 2 percent, the biggest drop since March 6.

The Bloomberg China-US 55 Index (CH55BN) of the most-traded Chinese equities in the U.S slipped 0.8 percent to 103.85 in New York yesterday.

The MSCI Asia Pacific Index (TPX) gained 11.4 percent this year through yesterday, compared with a 10.8 percent advance by the S&P 500 and an 8.6 percent increase 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 11.1 times for the Stoxx 600.

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Masaaki Iwamoto in Tokyo at miwamoto4@bloomberg.net

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

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