Japan Futures Signal Topix to Fall From 4 1/2-Year High

Japanese stock futures fell, indicating the Topix Index will retreat from the highest level since August 2008, as the yen rose and investors weighed the pace of Federal Reserve stimulus efforts.

American Depositary Receipts of Sony Corp., Japan’s biggest consumer electronics exporter, lost 0.9 percent. Those of Canon Inc., which gets about 80 percent of sales abroad, slid 0.5 percent. ADRs of Woodside Petroleum Ltd., Australia’s second-largest oil producer, gained 0.3 percent after crude climbed to a seven-week high.

Futures on Japan’s Nikkei 225 Stock Average expiring next month traded at 15,320 in Chicago yesterday, down from 15,390 at the close in Osaka, Japan. They were bid in the pre-market at 15,320 in Osaka at 8:05 a.m. local time. The Nikkei closed yesterday at the highest since Dec. 27, 2007.

“When markets are this elevated, investors generally look for any excuse to exercise caution,” said Stan Shamu, a Melbourne-based strategist at Markets Ltd., a provider of trading services. “It just seems we are starting to see a bit of consolidation ahead of the FOMC meeting minutes and Fed chief Ben Bernanke’s testimony on Thursday.”

Futures on Australia’s S&P/ASX 200 Index advanced 0.1 percent and New Zealand’s NZX 50 Index fell 0.2 percent.

Contracts on Hong Kong’s Hang Seng Index were little changed and those on the Hang Seng China Enterprises Index of mainland Chinese companies trading in Hong Kong retreated 0.2 percent. The Bloomberg China-US Equity Index of the most-traded Chinese shares in the U.S. climbed 1.7 percent in New York yesterday.

Japan Rally

The MSCI Asia Pacific Index, the benchmark regional equities gauge, surged 12 percent this year, led by Japanese shares, yesterday closing at the highest level since June 2008. Shares have risen as U.S. data signaled improvement in the world’s No. 1 economy and the Bank of Japan took steps to counter deflation.

That left the gauge trading at 14.6 times average estimated earnings compared with 15.1 for the Standard & Poor’s 500 Index and 13.5 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Futures on the S&P 500 were little changed today after the gauge yesterday retreated 0.1 percent from a record high. U.S. shares erased gains after Fed Bank of Chicago President Charles Evans said the economy has improved “quite a lot.” The question now is whether “improvements that have been made will continue and be sustained,” he said.

Some Fed officials in recent months have signaled they favor scaling back the quantitative-easing program in the next few months. Fed Chairman Ben Bernanke has said he would continue stimulus until the jobless rate falls to 6.5 percent or inflation rises above 2.5 percent. The Fed publishes minutes of its last policy meeting on May 22.Bernanke will testify that day on the economic outlook.

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