Japanese Stock Futures Rise as Weaker Yen Improves Earnings

By Yoshiaki Nohara 

Japanese stock futures rose amid optimism corporate earnings are improving after monetary easing by the Bank of Japan weakened the yen. Australian equities futures gained after U.S. jobless claims fell.

American depositary receipts of Sony Corp. (6758) added 5 percent from the closing share price in Tokyo after Japan’s No. 1 exporter of consumer electronics reported its first full-year profit in five years as the weaker yen boosted overseas revenue. ADRs of Komatsu Ltd. (6301), the world’s top producer of excavators, added 3 percent as it forecast profit will rise 46 percent this fiscal year. Those of BHP Billiton Ltd. (BHP), Australia’s biggest oil producer, rose 2 percent as crude capped its longest rally in nine months.

Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring in June closed at 13,985 in Chicago yesterday, up from 13,920 in Osaka, Japan. They were bid in the pre-market at 14,010 as of 8:05 a.m. in Osaka. Futures on Australia’s S&P/ASX 200 Index advanced 0.2 percent today. New Zealand’s NZX 50 Index rose 0.3 percent in Wellington. Markets in Australia and New Zealand were closed for national holidays yesterday.

“If the Bank of Japan carries out its intended policy over the next two years in terms of QE and stimulating that economy, we are going to see some substantial uplift,” Tim Schroeders, a portfolio manager who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne, said referring to bond purchases known as quantitative easing. “But the question remains globally in terms of how effective that policy is.”

Inflation Forecasts

All 18 economists surveyed by Bloomberg News predict no easing at the BOJ meeting today, as the bank releases inflation forecasts.

Investors are weighing how the yen’s decline will improve the earnings outlook for Japanese exporters. The yen has depreciated against all 16 of its major counterparts since April 4, when the central bank said it will double the amount of money circulating in the economy by the end of 2014 by buying government bonds, its boldest round of quantitative easing.

Futures on the Standard & Poor’s 500 Index (SPXL1) were little changed today. The index rose 0.4 percent in New York yesterday, as earnings from United Parcel Services Inc. to Cliffs Natural Resources Inc. topped estimates and data showed applications for jobless benefits fell by 16,000 to 339,000 last week.

Oil Advances

West Texas Intermediate crude for June delivery rose $2.21 to $93.64 a barrel on the New York Mercantile Exchange, the highest settlement since April 10. Prices increased 8 percent in the past six days, the longest consecutive winning streak since July.

The MSCI Asia Pacific Index (MXAP) gained 8.2 percent this year through yesterday amid optimism Japan will deploy more measures to beat deflation and that policy makers in the U.S. and China remain on standby to support growth. The Asian benchmark traded at 14.2 times estimated earnings yesterday, compared with 14.4 times for the S&P 500 and 12.9 times for the Stoxx Europe 600 Index.

The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese equities in the U.S. rose 1.7 percent to 92.46, the highest close since March 27.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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