Australian Stock Futures Drop on Concern Fed Will Taper Stimulus

Australian stock futures fell amid concern the Federal Reserve will scale back its stimulus measures if the U.S. labor market continues to improve. Japanese equity futures rose as the yen weakened.

American Depositary Receipts of Woodside Petroleum Ltd. (WPL), Australia’s second-biggest oil producer, sank 0.5 percent as crude dropped the most in three weeks yesterday. ADRs of Toyota Motor Corp., the world’s largest automaker, gained 0.7 percent as the yen weakened against the dollar from the close of Japanese equity markets yesterday. Canon Inc. shares may be active after Hewlett-Packard Co. (HPQ), the largest personal-computer maker to which Canon is a supplier, forecast third-quarter profit that topped analysts’ estimates.

Futures on Australia’s S&P/ASX 200 Index retreated 0.4 percent and New Zealand’s NZX 50 Index fell 0.1 percent. Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring next month traded at 15,710 in Chicago yesterday, up from 15,670 at the close in Osaka, Japan. They were bid in the pre-market at 15,710 in Osaka at 8:05 a.m. local time.

“You’re getting those knee-jerk reactions in markets,” said Angus Gluskie, managing director at Sydney-based White Funds Management, which oversees more than $350 million. “Bernanke is making it very clear to markets that at some point they will be likely to reduce the level of bond purchases and that’s an important point for the market to digest. He’s saying we’re going to wind this down at some point, but not with the economy the way it is.”

Hong Kong

Futures on Hong Kong’s Hang Seng Index gained 0.3 percent and contracts on the Hang Seng China Enterprises Index of mainland Chinese companies trading in Hong Kong added 0.4 percent. The Bloomberg China-US Equity Index of the most-traded Chinese shares in the U.S. dropped 2.2 percent in New York yesterday.

The MSCI Asia Pacific Index, the benchmark regional equities gauge, surged 11 percent this year through yesterday as U.S. economic data improved and Japan’s central bank took steps to counter deflation. That left the measure yesterday trading at 14.1 times average estimated earnings compared with 15 for the Standard & Poor’s 500 Index (SPX) and 13.6 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Futures on the Standard & Poor’s 500 Index rose 0.1 percent. The gauge yesterday fell 0.8 percent, reversing an earlier 1.1 percent advance. Stocks had rallied early in the day after Fed Chairman Ben S. Bernanke said in prepared remarks to Congress that a premature withdrawal of quantitative easing would put the economic recovery at risk.

Equities pared gains after Bernanke said the central bank could “step down” the pace of asset purchases in the next few meetings if the labor market continues to improve and “we have confidence that that is going to be sustained.”

The yen was trading at 103.15 per dollar as of 7:50 a.m. in Tokyo compared to 102.61 at the close of Japanese equity markets yesterday.

West Texas Intermediate crude for July delivery fell $1.90 to settle at $94.28 a barrel on the New York Mercantile Exchange.

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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