Japan Stock Futures, Australia Shares Drop on Economy Concern

Japanese stock futures and Australian shares fell as worse-than-estimated U.S. economic data spurred concern about the pace of growth and as investors speculated the Bank of Japan won’t meet forecasts for monetary policy expansion.

American Depositary Receipts of Toyota Motor Corp., the world’s largest carmaker, declined 2.1 percent as the yen strengthened against the dollar. ADRs of Mizuho Financial Group Inc., Japan’s third-biggest bank by market value, lost 2.3 percent ahead of the central bank decision. BHP Billiton Ltd., the world’s No. 1 miner, retreated 1.5 percent in Sydney.

Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring in June closed at 12,185 in Chicago yesterday, down from 12,360 at the close in Osaka, Japan. They were bid in the pre-market at 12,190 in Osaka at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index retreated 0.6 percent and New Zealand’s NZX 50 Index was little changed. Markets in China, Hong Kong and Taiwan are closed today for a holiday.

“Caution has set in as disappointing economic data finally caught up with investors,” said Matthew Sherwood, head of investment markets research in Sydney at Perpetual Investments, which manages about $25 billion. “Any under-whelming policy response from the Bank of Japan, which is something the BOJ is notorious for, will be detrimental. It could be a bumpy end to the week.”

The MSCI Asia Pacific Index, the benchmark regional equities gauge, yesterday traded at 13.4 times average estimated earnings compared with 14 for the Standard & Poor’s 500 Index and 12.6 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Futures on the S&P 500 Index (SPX) were little changed. Financial and energy shares tumbled yesterday, leading the S&P 500 to its largest drop in five weeks, as ADP Research Institute data showed U.S. companies boosted employment by 158,000 workers in March, less than the median forecast of 39 economists surveyed by Bloomberg who called for a 200,000 gain.

The data came before a non-farm payrolls report from the Labor Department on April 5, which may show employers hired a net 195,000 workers for the month, according to the median forecast of 87 economists surveyed by Bloomberg.

The Institute for Supply Management’s index of U.S. non- manufacturing businesses, which covers almost 90 percent of the economy, fell to 54.4 in March from 56 in February, the Tempe, Arizona-based group said yesterday. The median forecast of 73 economists surveyed by Bloomberg was 55.5. Readings above 50 signal expansion.

Bank of Japan Governor Haruhiko Kuroda may be constrained in the amount of stimulus he can deliver at the conclusion of his first policy meeting today as he seeks support from a board mostly appointed by the previous government.

The central bank chief has only three definite allies for boosting monthly bond purchases on the nine-person committee, according to BNP Paribas SA. Credit Suisse Group AG says a struggle to secure consensus could limit Kuroda to doing the “minimum required” and signaling stronger measures to come.

Disappointing investors would risk a rebound in the yen that would make it harder for the central bank to achieve Kuroda’s goal of 2 percent inflation in two years. The currency reached a 3 1/2-year low against the dollar last month and stocks surged as Kuroda proposed policies from increased bond buying to bringing forward open-ended asset purchases from 2014.

The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S. dropped 1.7 percent in New York yesterday. The London Metal Exchange Index of industrial metals retreated 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: John McCluskey at j.mccluskey@bloomberg.net

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