Japan Stock Futures, Australia Shares Drop on Europe Concerns
American Depositary Receipts of Sony Corp., a consumer- electronics maker that gets more than a fifth of its revenue in Europe, dropped 2 percent. Shares of China Petroleum & Chemical Corp. (386) may fall in Hong Kong after Asia’s biggest refiner said it plans to sell shares worth HK$24 billion ($3.1 billion) at 9.5 percent below yesterday’s closing price. Japan Airlines Co., the nation’s second-largest carrier, may be active after raising its full-year profit forecast 16 percent. BHP Billiton Ltd. declined 1.2 percent as metals prices dropped.
Futures on Japan’s Nikkei 225 Stock Average expiring next month closed at 11,135 in Chicago yesterday, down from 11,150 at the close in Osaka, Japan. They were bid in the pre-market at 11,140 in Osaka at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index retreated 0.7 percent and New Zealand’s NZX 50 Index fell 0.5 percent.
“It’s a return of worries about Europe,” said Shane Oliver, Sydney-based head of strategy at AMP Capital Investors Ltd., which has about $126 billion under management. “The market got very stretched and was due for a pullback, it was just a question of what the trigger would be. We could still see some further weakness this month.”
Spanish Premier Mariano Rajoy faces opposition calls to resign amid contested reports about illegal payments, and Italy’s Silvio Berlusconi narrowed the front-runner’s lead before elections this month. Spanish 10-year government yields jumped 23 basis points to 5.44 percent. Yields on similar- maturity Italian debt rose 14 basis points to 4.47 percent.
The Reserve Bank of Australia will hold its cash rate target unchanged at 3 percent today, according to 24 of 28 economists surveyed by Bloomberg News. Goldman Sachs Group Inc. and JPMorgan Chase and Co. last week dropped their forecasts for a rate cut at the first meeting of the year after a 76 percent rebound in the price of iron ore, the nation’s biggest export. The RBA has lowered the benchmark rate by 1.75 percentage points since November 2011 as it seeks to spur industries that will help to offset a peak in resource investment.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S. dropped 3.1 percent to 97.87 in New York yesterday. The Thomson Reuters/Jefferies CRB Index of raw materials slid 0.7 percent.
The MSCI Asia Pacific Index, the benchmark regional equities gauge, traded at 14.8 times average estimated earnings compared with 13.5 for the Standard & Poor’s 500 Index and a multiple of 12.1 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
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