Stock Index Futures Fall; Aussie Bond Yield Drops to Record Low

(Bloomberg) -- U.S. and Asian stock-index futures slipped and Australia’s 10-year bond yield fell to the lowest on record after a raft of disappointing Chinese economic data.

Futures on benchmark indexes in China, Australia, Japan and South Korea slid at least 0.2 percent. Contracts on the S&P 500 Index lost 0.2 percent, indicating the U.S. equity gauge will fall from a one-month low after the biggest gain in American retail sales in a year reignited speculation the Federal Reserve may raise interest rates as early as June. The yield on Australian sovereign debt due in a decade sank 6 basis points to 2.21 percent.

China’s retail sales, industrial production and fixed-asset investment data released on Saturday missed economist estimates. The nation’s central bank moved to reassure investors that monetary policy would continue to support the economy, with a statement Saturday that sought to explain a slump in new credit last month. Japan’s economy will be in focus this week, with a gross domestic product report forecast to show the country narrowly avoided falling into a recession in the first quarter. Earnings are due from Mitsubishi UFJ Financial Group Inc. and Japan Steel Works Ltd.

“Global growth remains fragile and uncertainty lingers around the Fed and China,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which manages about $116 billion. “A June or July Fed rate hike still looks unlikely, but there is a reasonable chance of a September hike.”

Japan remains focused on its earnings season. American depository receipts of Mizuho Financial Group Inc. sank 2 percent in New York after Japan’s second-biggest lender by assets forecast net income will decline 11 percent to a four-year low as the central bank’s negative interest-rate policy squeezes loan profitability.

Nippon Telegraph & Telephone Corp., Japan’s former phone monopoly, said after the market closed in Tokyo on Friday that it plans to buy back as much as 350 billion yen ($3.2 billion) of its shares from the government, its largest stake holder.

Berkshire Hathaway Inc. Chairman Warren Buffett is backing a group bidding for Yahoo! Inc.’s Internet assets, people familiar with the matter said. The consortium, which includes Quicken Loans Inc. founder Dan Gilbert, is in the second round of bidding for Yahoo’s assets, said the people, who asked not to be identified because the bidding process is private. Shares of Yahoo rose more than 1 percent in after-hours trading Friday.

Stocks

Futures on Australia’s S&P/ASX 200 Index lost 0.3 percent in most recent trading, while contracts on South Korea’s Kospi index slid 0.4 percent. Those on the FTSE China A50 Index dropped 0.6 percent and Japan’s Nikkei 225 Stock Average futures in Chicago fell 0.2 percent.

Currencies

The Aussie was little changed at 72.71 U.S. cents as of 9:32 a.m. in Sydney. The yen was also flat at 108.63 per dollar. The New Zealand dollar lost 0.1 percent to 67.69 U.S. cents.

Bonds

The yield on Australian 10-year bonds fell to as low as 2.2 percent, an all-time low and 32 basis points below its level at the end of April. The Reserve Bank of Australia, which this month cut its cash rate to an unprecedented 1.75 percent, has said core inflation will probably miss the bottom of its 2 percent to 3 percent target range this year and may undershoot into the middle of 2018.

Commodities

Crude oil rose 0.2 percent to $46.28 a barrel in early trading Monday, after Friday’s 1.1 percent loss.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net. To contact the editors responsible for this story: Jeff Sutherland at jsutherlan13@bloomberg.net, John McCluskey, Sarah McDonald

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