Japanese Stock Futures Rise on Boehner’s U.S. Budget Remarks

Japanese stock futures rose as U.S. lawmakers said they are optimistic a budget agreement can be reached to avoid automatic spending cuts and tax increases. Australian shares were little changed.

American Depositary Receipts of Komatsu Ltd. (6301), which gets about a quarter of its sales in the U.S., gained 0.9 percent. Sky Network Television Ltd. (SKT), New Zealand’s largest pay TV operator, jumped the most in more than two years in Wellington after the company announced payment of a special dividend. Starpharma Holdings Ltd. tumbled 38 percent in Sydney as the biotechnology company said it won’t file a drug application in the U.S. following a disappointing clinical trial for a new treatment.

Futures on Japan’s Nikkei 225 Stock Average expiring next month closed at 9,345 in Chicago yesterday, up from 9,300 in Osaka, Japan. They were bid in the pre-market at 9,330 in Osaka at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index (AS51) was little changed and New Zealand’s NZX 50 Index gained 0.2 percent in Wellington.

“Market expectations are that the U.S. cutbacks will be watered down and spread over several years,” said Matthew Sherwood, Perpetual Investment’s head of markets research in Sydney. Perpetual manages about $25 billion. “If the cliff is successfully flattened out over several years, the U.S. recession feared by markets is unlikely to occur.”

Budget Optimism

Futures on the Standard & Poor’s 500 Index fell 0.1 percent today. The S&P 500 rose 0.8 percent yesterday, reversing earlier declines, as Republican House Speaker John Boehner told reporters he is optimistic that budget talks can avert a so- called fiscal cliff of more than $600 billion in automatic tax increases and spending cuts that will kick in next year if an agreement is not reached. President Barack Obama is sending Treasury Secretary Timothy F. Geithner to meet congressional leaders today to discuss the issue.

“I’m optimistic that we can continue to work together to avert this crisis, and sooner rather than later,” Boehner told reporters in Washington yesterday before meeting with a group of executives, some of whom were heading to the White House later for a discussion with Obama.

Obama said more Republicans are agreeing on a “balanced approach” to cut the deficit, and he hopes a deal can be reached before Christmas.

“If we get this wrong, the economy’s going to go south,” the president said in an appearance on the White House grounds with a group of people who responded to a White House e-mail solicitation to describe how a tax increase would affect them.

U.S. Economy

The U.S. economy expanded at a “measured pace” in recent weeks as gains in consumer demand and housing were tempered by a slowdown in manufacturing and the impact of superstorm Sandy, the Federal Reserve said yesterday.

The comments indicate the Fed is unlikely to curtail monthly purchases of $40 billion in housing debt and bolsters Chairman Ben S. Bernanke’s view that an agreement on reducing long-term federal budget deficits without abrupt tax increases and spending cuts would remove a barrier to growth.

The MSCI Asia Pacific (MXAP) Index rose 13 percent from this year’s low on June 4 through yesterday as central banks added stimulus to spur growth and data showed a slowdown in China may be ending. The gauge traded at 13.9 times estimated earnings, compared with 13.6 times for the S&P 500 Index (SPX) and 12.4 times for the Stoxx Europe 600 Index.

The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S. gained 0.6 percent yesterday in New York.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

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

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