Japan, Australian Stock Futures Fall as ECB Disappoints

Japanese and Australia stock futures fell after European Central Bank President Mario Draghi failed to reassure investors on immediate action to support growth and a surge in Spanish bond yields added to concern about the region’s debt crisis.

American depositary receipts of Sony Corp. (6758), Japan’s No. 1 exporter of consumer electronics, plummeted 8.8 percent from the closing share price in Tokyo after cutting its profit forecast. Those of Sharp Corp. (6753), Japan’s largest maker of liquid-crystal displays, slumped 7.1 percent after widening its loss forecast and announcing job cuts. ADRs of BHP Billiton Ltd. (BHP), Australia’s biggest mining company and oil producer, dropped 1.2 percent as crude prices fell.

Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring in September closed at 8,565 in Chicago yesterday, down from 8,630 in Osaka, Japan. They were bid in the pre-market at 8,560 in Osaka at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index slid 0.7 percent today. New Zealand’s NZX 50 Index fell 0.3 percent in Wellington.

“If Spanish bond yields keep rising like this, it will only increase the chance Spain will apply for assistance,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “What was delivered was a commitment to action, but not immediately. It is a disappointment and it’s a bit of a setback.”

Spanish Yields

Futures on the Standard & Poor’s 500 Index dropped 0.1 percent today. The index fell 0.7 percent in New York yesterday after Draghi signaled the ECB intends to join forces with governments to buy bonds in sufficient quantities to ease the Europe’s crisis, while conceding that Germany’s Bundesbank has reservations about the plan. Details on the plan will be hammered out in coming weeks, he said after keeping the ECB’s benchmark interest rate on hold at 0.75 percent.

Yields on Spain’s 10-year government bonds surged 43 basis points to 7.17 percent yesterday.

On Aug. 1, the Federal Reserve also failed to bolster confidence. Its pledge to provide additional support for the economy disappointed investors anticipating a more definitive sign of further monetary easing.

A jobs report today may give more clues about the Fed’s next steps to ensure the recovery is not derailed. U.S. payrolls may have increased by 100,000 workers in July, following an 80,000 gain in June, according to the median estimate of economists surveyed by Bloomberg News ahead of Labor Department figures. The unemployment rate is projected to hold at 8.2 percent.

Oil Falls

Oil for September delivery fell $1.78 to settle at $87.13 a barrel on the New York Mercantile Exchange.

The MSCI Asia Pacific Index (MXAP) fell 8.5 percent from this year’s high on Feb. 29 through yesterday amid concern policy makers won’t do enough to counter Europe’s debt crisis and slowing economic growth in the U.S. and China. The regional benchmark index traded at 12.1 times estimated earnings, compared with 13.3 for the Standard & Poor’s 500 Index (SPXL1) and 11.1 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

In China, the government today is scheduled to report data on the nation’s non-manufacturing industries in July.

The Bloomberg China-US Equity Index of the most-traded Chinese companies in the U.S. retreated 0.8 percent to 85.67 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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