Japan Futures, Australian Stocks Slump on U.S. Earnings Reports

Japanese stockfutures and Australian shares slipped as earnings at General Electric Co. and Bank of America Corp. disappointed investors, prompting concern about the strength of the U.S. recovery.
Westpac Banking Corp., Australia’s third-largest bank, lost 0.7 percent. U.S.-traded receipts of Sumitomo Mitsui Financial Group Inc., Japan’s second-largest bank by market value, dropped 1.3 percent from the closing stock price on Oct. 16. The nation’s three largest banks are rejecting a debt relief plan to help rehabilitate Japan Airlines Corp., the Nikkei newspaper reported. Panasonic Corp., Japan’s largest home-appliance maker, gained 0.5 percent after Morgan Stanley boosted its rating on the shares and the yen weakened.

“U.S. earnings expectations are already reflected in market prices, so it’s easy for shares to fall on any miss to forecasts,” said Kazuhiro Takahashi, a general manager at Daiwa Securities SMBC Co. in Tokyo.

Futures on Japan’s Nikkei 225 Stock Average expiring in December finished at 10,205 in Chicago on Oct. 16, down from 10,270 in Osaka and 10,280 in Singapore.

Australia’s S&P/ASX 200 Index dropped 0.5 percent to 4,811.50 as of 10:12 a.m. today in Sydney. New Zealand’s NZX 50 Index gained 0.2 percent in Wellington.


In New York, the Standard & Poor’s 500 Index lost 0.8 percent on Oct. 16. GE fell 4.2 percent after revenue trailed forecasts, while earnings were aided by a tax credit. Bank of America led financial shares lower after reporting a $1 billion loss.

JAL Plan

The MSCI Asia Pacific Index rose to the highest in more than a year last week, as the economies of Asia rebounded faster from the global recession. The seven-month rally has driven valuations of stocks in the gauge to 23.1 times estimated earnings, compared with an average of 18 times during the last three years.

Japan’s three largest banks, Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui, and Mizuho Financial Group Inc., have decided to reject a government plan to help revive Japan Airlines, Asia’s biggest carrier, the Nikkei reported yesterday. Japan Airlines has slumped 40 percent in the last month.
The yen weakened to as low as 91.32 against the dollar on Oct. 16, a level not seen since Sept. 25. The weaker yen boosts the value of sales generated overseas in local terms for Japanese companies.

- Via Bloomberg