Japanese stock futures and Australian equities fell as investors focused on the U.S. budget debate and China’s once-in-a-decade leadership change amid concern that growth in the world’s two largest economies is waning.
BHP Billiton Ltd., the world’s biggest mining company, dropped 1.3 percent in Sydney as commodity prices retreated. American Depositary Receipts of Hitachi Ltd., the electronic equipment maker that gets 42 percent of its sales outside Japan, fell 2.3 percent. Shares of Bridgestone Corp., the world’s largest maker of tires, may be active in Tokyo after profit missed analysts’ estimates.
Futures on Japan’s Nikkei 225 Stock Average expiring in December closed at 8,850 in Chicago yesterday, down from 8,960 in Osaka, Japan. They were bid in the pre-market at 8,850 in Osaka at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index lost 1.2 percent today. New Zealand’s NZX 50 Index retreated 0.3 percent in Wellington as a report showed the unemployment rate unexpectedly rose last quarter to a 13-year high.
“The euphoria from President Barack Obama’s re-election has swiftly waned,” said Stan Shamu, a market strategist at IG Markets, Melbourne-based provider of trading services in stocks, commodities and currencies. Investors “decided to focus on some of the key issues the president will be facing, the fiscal cliff and the debt ceiling.”
Futures on the Standard & Poor’s 500 Index gained 0.3 percent today. U.S. stocks slumped yesterday, with the Dow Jones Industrial Average posting its biggest decline in a year, as investors focused on the $607 billion of tax increases and federal spending cuts set to kick in automatically in January, the so-called fiscal cliff. The Congressional Budget Office has said the U.S. economy will slow by as much as 0.5 percent next year if Congress fails to keep the increases from taking effect.
The MSCI Asia Pacific Index gained 13 percent through yesterday from this year’s low on June 4 as central banks added stimulus amid a slowdown in global economic growth and the European debt crisis. Shares on the measure traded at 13.5 times average estimated earnings, compared with 13.4 for the S&P 500 and 12.2 for the Stoxx Europe 600 Index.
China’s Communist Party starts its 18th Congress in Beijing today, when delegates will meet over several days to pick a new leader. Xi Jinping will probably replace Hu Jintao as general secretary of the party that’s ruled China since 1949.
The Bloomberg China-US Equity Index of the most-traded Chinese shares in the U.S. tumbled 1.9 percent to 93.92 yesterday in New York.
In Europe, Greek Prime Minister Antonis Samaras mustered the support of enough lawmakers to secure approval of austerity measures that will unlock bailout funds, after more than 50,000 protesters ringed Parliament.
Approval of the legislation, which raises the retirement age by two years to 67 and cuts wages and pensions a second time this year, is the first of the votes required by Nov. 12 to get a 31 billion-euro ($40 billion) aid tranche and avert a financial collapse that may drive the country from the euro.
The Thomson Reuters/Jefferies CRB Index of raw materials retreated 1.9 percent yesterday.