Japan Stock Futures Fall, Yen Gains as U.S. Budget Talks Regress

Japanese stock futures fell as the yen gained against the dollar, weakening the earnings outlook for exporters, and amid concern that U.S. federal budget negotiations regressed.

American Depositary Receipts of Canon Inc. (7751), a Japanese camera maker that gets 80 percent of its sales abroad, slid 1.2 percent. Shares of computer-game maker Capcom Co. (9697) may be active in Tokyo after cutting its profit forecast. BHP Billiton Ltd., the world’s largest mining company, slid 0.2 percent as metals prices fell.

Futures on Japan’s Nikkei 225 Stock Average expiring in March closed at 10,140 in Chicago yesterday, down from 10,180 in Osaka, Japan. They were bid in the pre-market at 10,130 in Osaka at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index gained 0.1 percent. New Zealand’s NZX 50 Index rose 0.6 percent even as a report showed economic growth slowed more than economists forecast last quarter.

“Cracks appeared in the fiscal-cliff negotiations,” said Stan Shamu, Melbourne-based markets strategist at IG Markets Ltd. “The Republicans failed to come up with a reasonable compromise to President Obama’s proposal. Market participants decided to exercise caution despite U.S. leaders still insisting they are hoping to have something done by Christmas.”

Standard & Poor’s 500 Index futures fell 0.4 percent today. The gauge slid 0.8 percent yesterday as White House Communications Director Dan Pfeiffer said House Speaker John Boehner’s “Plan B” would put “too big a burden on the middle class” and President Barack Obama would veto it. Boehner replied that Obama will be responsible for “the largest tax increase in American history” if Democrats don’t accept the measure the House plans to pass today.

House Vote

The House may vote today on Boehner’s plan, which would raise tax rates on income of above $1 million, rather than the $400,000 threshold the president proposed in his latest offer. Boehner is looking to pressure Obama to accept deeper spending cuts and a higher threshold for rate increases by showing how tough it will be to win Republican support for any higher taxes.

Japan’s Nikkei 225 Stock Average (NKY) climbed 17 percent since Nov. 14 through yesterday on expectations the Liberal Democratic Party, which returned to power at an election last weekend, will raise spending and secure more easing from the central bank to boost the economy.

The BOJ will probably increase monetary stimulus after a two-day policy meeting that ends today, 17 of the 21 analysts surveyed by Bloomberg say. The yen today rose 0.4 percent to 84.06 per dollar.

Relative Value

“Should we see a sell-off on the back of the BOJ meeting, buying the dips is likely to be the preferred strategy as the government is still likely to exercise some aggressive action going forward,” Shamu said.

The MSCI Asia Pacific Index climbed 14 percent this year through yesterday as central banks from the U.S., Europe, Japan and China took action to spur economic growth. The gauge traded at 14.7 times average estimated earnings compared with 13.8 for the Standard & Poor’s 500 Index and 12.8 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Trading resumes today in South Korea after Park Geun Hye was elected president, becoming the first woman to lead Asia’s fourth-biggest economy more than 30 years after her father’s reign as dictator ended with his assassination.

The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese companies in the U.S. climbed 0.4 percent yesterday in New York to close at 97.15.

The London Metal Exchange Index of six industrial metals slid 0.9 percent yesterday.

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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