Japanese Stock Futures Little Changed on Fed Policy, Yen

Japanese stock futures were little changed as speculation the Federal Reserve will boost stimulus measures to spur growth weakened the dollar to a three-month low against the yen.

American depositary receipts of carmaker Toyota Motor Corp. (7203), which gets a quarter of its revenue in North America, dropped 0.3 percent from the closing share price in Tokyo. Those of Komatsu Ltd. (6301), Japan’s largest construction machinery maker, added 2.1 percent after a preliminary report showed the nation’s machine tool orders fell at a slower pace in August. ADRs of BHP Billiton Ltd. (BHP), Australia’s biggest mining company and oil producer, rose 0.8 percent as crude gained.

Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring in September closed at 8,810 in Chicago yesterday compared with 8,800 in Osaka, Japan. They were bid in the pre-market at 8,800 in Osaka at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index added 0.4 percent after Chinese Premier Wen Jiabao signaled there’s more room for fiscal and monetary policy to support growth. New Zealand’s NZX 50 Index gained 0.4 percent in Wellington.

“The market is getting confident that governments won’t let economies get worse, as expectations are mounting in the U.S. for more monetary easing and China expands public investment,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc. “The market won’t see a clear direction as investors are still sitting on the fence.”

Relative Value

The MSCI Asia Pacific Index (MXAP) gained 1.8 percent this quarter through yesterday as expectations of further stimulus measures overshadowed signs of a global economic slowdown. The Asian benchmark traded at 12.4 times estimated earnings, compared with 13.9 times for the Standard & Poor’s 500 Index (SPXL1) and 12 times for the Stoxx Europe 600 Index.

Futures on the Standard & Poor’s 500 Index fell 0.1 percent today. The index rose 0.3 percent in New York yesterday before the Federal Open Market Committee starts a two-day meeting today to discuss additional measures to stimulate the U.S. economy. Fed Chairman Ben S. Bernanke said on Aug. 31 he wouldn’t rule out steps to lower an unemployment rate he described as a “grave concern.”

Additional stimulus measures by the Fed may be a mixed blessing for Japanese stocks as they buoy investors’ risk sentiment while weakening the dollar against the yen.

The yen reached 77.70 per dollar yesterday, the highest level since June 1. A stronger yen cuts the value of overseas earnings at Japanese exporters when repatriated.

U.S. Rating

Separately, Moody’s Investors Service said yesterday it may join Standard & Poor’s in downgrading the U.S. credit rating unless Congress next year reduces the percentage of debt-to- gross-domestic-product during budget negotiations.

Chinese stocks traded in New York gained after Wen said China still has “ample strength” with fiscal and monetary policy to meet its economic goals for the year. Wen spoke yesterday at the World Economic Forum in the Chinese city of Tianjin.

The Bloomberg China-US Equity Index of the most-traded Chinese companies in New York rallied 1.7 percent to 89.42 yesterday, the highest closing level since Aug. 28.

In Japan, a government report today is forecast to show machinery orders gained 2 percent in July, compared with a 5.6 percent increase in June, according to the median estimate of economists surveyed by Bloomberg News.

Machine tool orders dropped 2.6 percent in August after falling 6.7 percent in July, the Japan Machine Tool Builders’ Association said in a preliminary report yesterday.

Separately, South Korea’s jobless rate was unchanged at 3.1 percent in August, the government reported today.

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Masaaki Iwamoto in Tokyo at miwamoto4@bloomberg.net

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