Asia Stock Futures Drop Before U.S. Data; Yen Strengthens

Stock futures in Japan, Hong Kong and Australia fell before investors get their next look at the health of the U.S. economy with reports on jobless claims and retail sales. The yen strengthened against its major peers.

American Depositary Receipts of Toyota Motor Corp. fell 2.6 percent from the close in Tokyo as the yen gained against the dollar, weakening the earnings outlook at the world’s largest carmaker. ADRs of Cathay Pacific Airways Ltd., Asia’s biggest international carrier, declined 1.8 percent from the close in Hong Kong. Those of BHP Billiton Ltd., the largest mining firm, slid 0.7 percent.

Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring this month closed at 13,000 in Chicago yesterday, 2.1 percent below the 13,280 close in Osaka. They were bid in the pre-market at 12,980 in Osaka at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index retreated 0.8 percent, indicating the market will enter a correction, commonly defined as a 10 percent drop from a recent high. New Zealand’s NZX 50 Index fell 0.3 percent.

“People are still trying to assess the prospects, likelihood and timing of tapering from the Federal Reserve,” Chris Green, Auckland-based strategist at First NZ Capital Ltd., a brokerage and wealth-management firm, said in a phone interview. “They are easing off the accelerator, not applying the brakes. Markets want stability in the economy but they also want unlimited stimulus. The two can’t continue to exist together.”

Futures on Hong Kong’s Hang Seng Index slid 0.6 percent and contracts on the Hang Seng China Enterprises Index of mainland companies trading in Hong Kong retreated 0.8 percent. The Bloomberg China-US Equity Index of the most-traded Chinese shares in the U.S. dropped 1 percent in New York yesterday. Markets in China and Hong Kong reopen after holidays.

Stimulus Expectations

The MSCI Asia Pacific Index, the benchmark regional equities gauge, fell 8.6 percent through yesterday from this year’s high on May 20 on speculation that an improving U.S. economy will lead the Federal Reserve to scale back record stimulus. Fed Chairman Ben S. Bernanke said in May that policy makers could reduce the pace of bond buying should there be sustained improvement in the U.S. economy.

The Asian benchmark yesterday traded at 12.8 times average estimated earnings, compared with 14.6 for the Standard & Poor’s 500 Index (SPX) and 12.8 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. U.S. stocks fell yesterday, with the Dow Jones Industrial Average posting its first three-day losing streak this year, as investors weighed prospects for economic growth and the pace of Fed stimulus measures. Sustainable jobs growth and wage gains have been cited as conditions for scaling back stimulus. Fed policy makers next meet June 18-19.

The World Bank cut its global growth forecast for this year after emerging markets from China to Brazil slowed more than projected, while budget cuts and slumping investor confidence deepened Europe’s contraction.

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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