Japan Stock Futures Gain Before China Data; Apple Shares Tumble

Japanese stock futures gained before a report that may show Chinese manufacturing expanded this month. U.S. equity futures fell as Apple Inc. shares slumped in after-hours U.S. trading.

American Depositary Receipts of Sharp Corp., which makes display panels for Apple’s iPhone 5, fell 1 percent as the world’s most valuable company reported sales below analysts’ estimates. Apple shares dropped 10 percent in after-hours trading in New York. Newcrest Mining Ltd. retreated 1.2 percent as Australia’s largest gold producer reported a 15 percent decline in output in the second quarter.

Futures on Japan’s Nikkei 225 Stock Average expiring in March closed at 10,510 in Chicago yesterday, up from 10,470 at the close in Osaka, Japan. They were bid in the pre-market at 10,470 in Osaka at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index was little changed and New Zealand’s NZX 50 Index advanced 0.1 percent. Futures on the Standard & Poor’s 500 Index fell 0.4 percent.

“Signs are mounting that the global equity bull market is gathering momentum,” said Mikio Kumada, Hong Kong-based global strategist for LGT Capital Management, which oversees more than $20 billion. This week “we increased our exposure to Japanese equities. Japanese companies are still attractively valued and boast a very high operational leverage -- meaning they are well-positioned to boost earnings significantly even in an environment of moderate GDP growth.”

Election Boost

The S&P 500 Index yesterday closed at the highest level since December 2007 and Australia’s S&P/ASX 200 is trading at its best level since May 2011. Japan’s Nikkei 225 has risen 21 percent since elections were announced on Nov. 14, and last week capped its longest weekly winning streak since 1986 on optimism the central bank will ease monetary policy amid pressure from Prime Minister Shinzo Abe’s new government. The gauge fell the last three days as the yen climbed and the Bank of Japan said it will wait a year to add open-ended stimulus.

The International Monetary Fund yesterday cut its forecast for global economic growth and the U.S. House voted 285-144 to temporarily suspend the federal debt limit.

Apple reported first-quarter sales below analysts’ predictions, adding fuel to investor pessimism that has sent its shares down 27 percent since September.

“Stepping back, and looking at the numbers as objectively as possible, it seems the run has come to an end,” said Neil Campling, London-based analyst at Aviate Global LLP. “The long-term buy case no longer stands. The cheap valuation argument matters little when the earnings momentum fades.”

China Manufacturing

China’s manufacturing may expand in January, according to economists’ estimates ahead of a monthly Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics due to be released today. The index will climb to 51.7 from 51.5, the survey predicts. A level above 50 indicates expansion. The world’s second-largest economy is rebounding from a seven-quarter slowdown after the government increased spending on infrastructure and accelerated investment-project approvals.

The Bloomberg China-US Equity Index of the most-traded Chinese shares in the U.S. dropped 0.5 percent to 101.24 yesterday in New York.

The MSCI Asia Pacific Index, the benchmark regional equities gauge, traded at 14.2 times average estimated earnings compared with 13.5 for the Standard & Poor’s 500 Index and 12.2 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

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