Japan, Australian Stock Futures Drop on European Concern
Japanese and Australian stock futures fell as initial optimism over Spain’s bailout plan gave way to skepticism that the rescue will succeed in taming the European debt crisis.
American Depositary Receipts of BHP Billiton Ltd. (BHP), the world’s largest mining company, lost 1.2 percent from the most recent closing price in Sydney as investors sold shares of companies with earnings closely tied to economic growth. ADRs of Canon Inc. (7751), a Japanese camera maker that depends on Europe for almost a third of its sales, fell 2.7 percent. Those of Sony Corp. (6758), Japan’s biggest consumer electronics exporter, sank 3.4 percent.
Futures on Japan’s Nikkei 225 Stock Average expiring in September closed at 8,465 in Chicago yesterday, down from 8,610 in Osaka, Japan. They were bid in the pre-market at 8,470 in Osaka at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index declined 1.1 percent today. New Zealand’s NZX 50 Index retreated 0.7 percent in Wellington.
“There appears to be plenty of cynicism,” said George Boubouras, Melbourne-based head of investment strategy at UBS AG’s Australian wealth-management unit. The Swiss bank has about $1.5 trillion in assets under management. “Spain will remain the focus for a few days as markets review all possible outcomes and implications for other troubled euro-zone members. More firewalls will be required for other euro-zone countries.”
The MSCI Asia-Pacific Index (MXAP) climbed 1.8 percent yesterday, its biggest gain since February. The gauge dropped 12 percent from its peak this year on Feb. 29. through yesterday amid concern economic growth is slowing in China and the U.S. and as Europe’s debt crisis intensified.
European officials have failed to control the debt crisis that began in Greece at the end of 2009. Spain two days ago became the fourth euro-area nation to seek a bailout since the start of the crisis with a request for as much as 100 billion euros ($125 billion) to rescue its banks. Premier Mariano Rajoy, who as recently as May 28 said he wouldn’t seek a rescue, characterized the deal as a credit line for lenders.
Polls show a June 17 election in Greece may be a close race. An election on May 6 failed to produce a viable governing majority. Syriza party leader Alexis Tsipras has pledged to keep Greece in the euro while scrapping bailout terms in order to end the hardship brought on by austerity. Meanwhile, pro-bailout proponents, such as New Democracy leader Antonis Samaras, have framed the contest as a decision on whether to leave the euro area.
Futures on the Standard & Poor’s 500 Index fell 0.1 percent today. The gauge lost 1.3 percent yesterday in New York after climbing as much as 0.7 percent in the first minutes of trading.
The MSCI Asia Pacific Index dropped 0.3 percent this year through yesterday, compared with a 4.1 percent advance by the S&P 500 and a 1.1 percent drop by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 1.2 times book value, compared with 2.1 times for the S&P 500 and 1.3 times for the Stoxx 600, according to data compiled by Bloomberg. A number below one means companies can be bought for less than value of their assets.
The Bloomberg China-US Equity Index of the most-traded Chinese companies in the U.S. dropped 0.3 percent to 90 yesterday.
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