Japanese Stock Futures Fall as Slowdown Erodes Earnings

Japanese stock futures and Australian equities fell on concern the global economic slowdown is crimping corporate earnings and as commodities erased this year’s gains.

American Depositary Receipts of Canon Inc., camera maker that gets 80 percent of its revenue overseas, fell 1.6 percent from the closing price in Tokyo. Kawasaki Heavy Industries Ltd. may be active in Tokyo after the gas-turbine maker said in preliminary a statement first-half earnings missed its forecasts on the economic slowdown in China and Europe. BHP Billiton Ltd. (BHP), Australia’s biggest oil producer and the world’s No. 1 mining company by market value, lost 1.7 percent after crude and metals prices declined.

Futures on Japan’s Nikkei 225 Stock Average expiring in December closed at 8,920 in Chicago yesterday, down from 9,000 in Osaka, Japan. They were bid in the pre-market at 8,910 in Osaka at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index fell 0.5 percent today. New Zealand’s NZX 50 Index lost 0.5 percent in Wellington.

“Investor sentiments are being swayed” as major U.S. companies cut earnings forecasts in addition to the global economic slowdown, said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc. “More investors are likely to sell shares as the markets are kind of overheated.”

Futures on the Standard & Poor’s 500 Index added 0.1 percent today. The gauge declined 1.4 percent yesterday in New York, the lowest close since Sept. 5, amid disappointing earnings results at companies from 3M Co. to DuPont Co.

Yen Gains

3M, the maker of products ranging from Scotch tapes to dental braces, cut its full-year profit forecast as a recession in Europe and slowing Asian growth crimped sales. DuPont, the most valuable U.S. chemical maker, said it will eliminate about 1,500 jobs after posting a smaller third-quarter profit than analysts estimated on falling demand for paint pigment.

The dollar and yen gained versus most major counterparts as companies reported financial results that missed analyst estimates, adding to evidence the global economy is slowing and sapping risk appetite.

The Japanese currency appreciated to as high as 103.68 against the euro today in Tokyo, compared with 104.26 at the close of stock trading yesterday, cutting the value of overseas income at Japanese companies when converted into their home currency.

Commodities declined, erasing this year’s advance, on speculation that demand for energy, industrial metals and some agricultural products will slump because of the sluggish global economy. The Standard & Poor’s GSCI Spot Index of 24 raw materials fell 1.4 percent yesterday in New York. Earlier, the gauge touched 635.1, the lowest level since Aug. 3.

Oil Drops

Crude oil for December delivery declined to $86.67 a barrel in New York yesterday, the lowest settlement since July 12. Prices are down 12 percent this year.

The London Metal Exchange Index of prices for six industrial metals including copper and aluminum yesterday fell 1.3 percent to the lowest close since Sept. 6.

The Bloomberg China-US 55 Index (CH55BN) of the most-traded Chinese equities in the U.S slipped 1.3 percent to 95.41 in New York yesterday, the steepest fall since Sept. 20.

The MSCI Asia Pacific (MXAP) Index rebounded 12 percent through yesterday from this year’s low on June 4 as stimulus measures in Europe, the U.S., Japan and China boosted market sentiment amid a global economic slowdown and Europe’s debt crisis. The Asian benchmark traded at 13 times estimated earnings on average, compared with 13.5 for the Standard & Poor’s 500 Index and 12 for the Stoxx Europe 600 Index.

Japan’s current earnings season peaks next week, with 570 of the 1,672 companies listed on the Topix Index reporting results. Nintendo Co. and steelmaker JFE Holdings Inc. are among 124 companies scheduled to post this week.

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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