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Japanese Stock Futures Little Changed After LDP Reclaims Power

Japanese stock futures were little changed after the Liberal Democratic Party reclaimed power in a landslide weekend election victory. Australian shares fell as China signaled its new leaders may accept slower growth.

American Depositary Receipts of Canon Inc. (7751), the Japanese camera maker that gets 80 percent of sales abroad, climbed 0.8 percent. Shares of Asahi Glass Co. (5201) may move after the Nikkei newspaper said the glass manufacturer is likely to miss its profit forecast. Fairfax Media Ltd., Australia’s second-largest newspaper company, rose 2.9 percent in Sydney after selling its remaining 51 percent stake in Trade Me Ltd., a New Zealand online auction site, for A$616 million ($650 million).

Futures on Japan’s Nikkei 225 Stock Average (NKY) were bid in the pre-market at 9,750 in Osaka at 8:05 a.m. local time compared to the futures contracts closing level of 9,755 in Chicago last week and 9,760 in Osaka, Japan. Australia’s S&P/ASX 200 Index slipped 0.1 percent and New Zealand’s NZX 50 Index fell 0.2 percent.

There’s a belief “of political change and the prospect of more radical action from the Bank of Japan when current leader Masaaki Shirakawa steps down in early April,” said Chris Weston, chief market strategist at IG Markets Ltd. in Melbourne.

Shinzo Abe’s LDP yesterday captured 294 seats in the 480- member lower house of parliament, while Prime Minister Yoshihiko Noda’s Democratic Party of Japan lost three-fourths of its lawmakers, according to public broadcaster NHK’s vote count. Abe, 58, is set to replace Noda, returning to the office he left five years ago for health reasons.

Yen Weakens

The Japanese yen weakened to the lowest level against the dollar since April 2011 on bets Abe’s party will reshape the Bank of Japan’s leadership after Governor Shirakawa steps down in April. Japan’s Nikkei 225 Stock Average has gained 12 percent since Nov. 14, when the ruling party said it would call elections, with bets an opposition party calling for more monetary easing would win. Abe, as Japan’s seventh leader in six years, will inherit a country in recession, still reeling from the 2011 earthquake and nuclear crisis, and embroiled in a diplomatic dispute with China.

China said it will seek a higher “quality and efficiency” of growth next year, signaling new leaders may accept a reduced pace of expansion in exchange for a more sustainable model.

There was no mention of seeking “relatively fast” growth, a policy in place since 2006, in a report yesterday by the state-run Xinhua News Agency after the annual central economic work conference in Beijing. Leaders vowed to target “sustained and healthy development” as they maintain a “prudent” monetary policy and “proactive” fiscal stance, Xinhua said.

U.S. Futures

Standard & Poor’s 500 Index futures fell 0.2 percent today. The gauge dropped 0.4 percent on Dec. 14, for the first weekly decline in a month, as budget talks overshadowed the Federal Reserve’s plan to expand bond purchases and better-than- estimated economic data.

U.S. House Speaker John Boehner offered to raise income tax rates on households earning more than $1 million a year in exchange for containing the cost of federal entitlement programs, as part of a deal with President Barack Obama to cut the federal deficit, according to two people familiar with the talks.

The offer, made in a Dec. 14 phone call between the two leaders, marks the first time Boehner has entertained an increase in income-tax rates in his talks with Obama to avoid more than $600 billion in automatic spending cuts and across- the-board tax increases set to start next month.

The MSCI Asia Pacific Index last week gained 1 percent, with the gauge capping its longest streak of daily gains since January 2004. The benchmark equities index rose 17 percent from this year’s low on June 4 through Dec. 14 as central banks from the U.S., Europe, Japan and China took action to spur economic growth. The gauge traded at 14.4 times average estimated earnings, compared with 13.6 for the Standard & Poor’s 500 Index and 12.7 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S. climbed 1.4 percent to 95.82 in New York on Dec. 14.

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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