Australian Stocks, Japan Futures Fall on China Slowdown

Japanese stock futures and Australian equities fell on concern China’s economic slowdown and its territorial dispute with Japan are weighing on corporate earnings.

American depositary receipts of Nissan Motor Co. (7201), Japan’s third-largest carmaker by market value, slid 1.6 percent from the closing share price in Tokyo after reporting its biggest drop in China sales since at least 2008. Alumina Ltd. dropped 2.3 percent in Sydney after Alcoa Inc. cut its forecast for global consumption of aluminum as the Chinese economy slows. Rio Tinto Group (RIO) added 0.3 percent as Australia’s second-biggest mining company by market value plans to cut jobs and delay decisions on building projects on a slower growth in China.

Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring in December closed at 8,675 in Chicago yesterday, down from 8,770 in Osaka, Japan. They were bid in the pre-market at 8,680 in Osaka,at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index declined 0.4 percent today. New Zealand’s NZX 50 Index lost 0.6 percent in Wellington.

“We are clearly seeing the impact of a Chinese slowdown globally and it’s indicated in Alcoa’s numbers,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages almost $100 billion. “Equity markets have had a very strong run. So, it won’t be surprising if they go through some correction. In a sense, actually a correction will be healthy.”

Relative Value

The MSCI Asia Pacific Index gained 6.9 percent this year through yesterday as a series of stimulus measure from Europe to the U.S. and Japan countered a global economic slowdown. The Asian benchmark trades at 12.8 times estimated earnings on average, compared with 13.7 times for the Standard & Poor’s 500 Index and 12 times for the Stoxx Europe 600 Index.

Futures on the S&P 500 Index (SPXL1) added less than 0.1 percent today. The index fell 1 percent in New York yesterday as the International Monetary Fund cut estimates for global growth and investors awaited quarterly results from Alcoa.

Alcoa, the largest U.S. aluminum producer, cut its forecast for global consumption of the metal by 1 percentage point as Chinese economic growth slows. Demand will increase by 6 percent this year, the New York-based company said yesterday in its third-quarter earnings statement.

Japanese carmakers may extend yesterday’s losses after Nissan, Toyota Motor Corp. and Honda Motor Co. reported drops in China sales as rioters torched dealerships and smashed cars in protests sparked by a China-Japan territorial dispute over a group of islands.

The Bloomberg China-US Equity Index of the most-traded Chinese companies in the U.S. slid 0.3 percent to 91.82 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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