Japan, Australian Stock Futures Decline on Fed Stimulus Concerns

Japanese and Australian stock futures fell as economists said the Federal Reserve may scale back its stimulus efforts as early as September amid improving economic growth.

American Depositary Receipts of Nomura Holdings Inc., Japan’s largest brokerage, declined 1.1 percent. Shares of Fast Retailing Co. (9983), Asia’s biggest clothing retailer, may be active after store sales in May at Uniqlo Japan outlets climbed 11 percent. ADRs of Westpac Banking Corp. (WBC) declined 0.4 percent before a report to be released today that may show the Australian economy grew 2.7 percent in the first quarter from a year earlier, the weakest pace since the fourth quarter of 2011.

Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring this month closed at 13,570 in Chicago, down from 13,650 at the close in Osaka, Japan. They were bid in the pre-market at 13,560 in Osaka at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index retreated 0.4 percent and New Zealand’s NZX 50 Index fell 0.1 percent.

“Fed tapering fears are likely to be felt for several months and this is likely to see ebbs and flows in markets,” said Matthew Sherwood, Sydney-based head of investment market research at Perpetual Ltd., which manages about $25 billion. “The tapering will lay the framework by which markets can prepare to function in a way that is less dependent on central-bank stimulus.”

Bond Purchases

Goldman Sachs Group Inc. economist Jan Hatzius and Joseph Lavorgna at Deutsche Bank AG predicted the Fed may begin to taper bond purchases beginning in September. The U.S. central bank is buying $85 billion of Treasury and mortgage bonds each month to put downward pressure on borrowing costs under its quantitative-easing strategy.

Fed Bank of Kansas City President Esther George, who has dissented against record stimulus at every policy meeting this year, urged the Fed to reduce purchases in the text of a speech she was due to give in Santa Fe, New Mexico, yesterday. She was unable to speak because of illness.

Japan’s Topix index is down about 12 percent from an almost five-year high on May 22. Japan’s broadest equity measure has swung by an average of 3.9 percent daily since May 23. Japan is still the best-performing major equity market this year, with the Topix and Nikkei 225 Stock Average both up around 30 percent on optimism the nation can emerge from 15 years of deflation.

Hong Kong

Futures on Hong Kong’s Hang Seng Index gained 0.1 percent and contracts on the Hang Seng China Enterprises Index of mainland Chinese companies trading in Hong Kong retreated 0.3 percent. The Bloomberg China-US Equity Index of the most-traded Chinese shares in the U.S. dropped 0.3 percent in New York yesterday.

Futures on the Standard & Poor’s 500 Index were little changed. The gauge lost 0.6 percent yesterday as economists predicted the Federal Reserve may reduce stimulus as soon as September.

The MSCI Asia Pacific Index, the benchmark regional equities gauge, gained 4.1 percent this year through yesterday. That left the gauge yesterday trading at 13.1 times average estimated earnings compared with 14.8 for the Standard & Poor’s 500 Index (SPX) and 13.2 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Australia’s economy probably grew 0.7 percent in the first quarter from the previous three months and 2.7 percent from a year earlier, according to the median estimate in a Bloomberg survey of economists.

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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