Australia Stocks, Japan Futures Drop on U.S. Spending Concern

By Masaki Kondo

Nov. 13 (Bloomberg) -- Australia shares and Japan's stock futures dropped as slumping earnings at U.S. companies stoked concern demand in the world's biggest economy will wane.

Woodside Petroleum Ltd. retreated 3.9 percent in Sydney after oil prices fell to a 21-month low. U.S.-traded receipts of Sony Corp. lost 8.5 percent from the closing share price in Tokyo, after Best Buy Co. cut its forecast on a ``seismic'' spending slowdown and the yen rose to a two-week high. Sumitomo Mitsui Financial Group Inc. sank 9.2 percent as Treasury Secretary Henry Paulson's plan to divert the $700 billion rescue package from banks to consumer credit points to prolonged credit turmoil.

Australia's S&P/ASX 200 Index fell 3.9 percent to 3,774.90 as of 10:24 a.m. in Sydney. New Zealand's NZX 50 Index lost 1.4 percent to 2,734.21 in Wellington. In New York, the Standard & Poor's 500 Index sank 5.2 percent.

``Best Buy's forecast illustrates the dimming spending climate in the U.S.,'' Mitsushige Akino, who oversees about $468 million at Ichiyoshi Investment Management Co., said in an interview with Bloomberg Television. ``With Paulson's plan change, investors think the initial $700 billion won't be enough.''

Nikkei 225 Stock Average futures expiring in December closed at 8,165 in Chicago, 6.6 percent lower than 8,740 in Osaka and Singapore. The Bank of New York Mellon Asia ADR Price Index, which tracks American depositary receipts of the region's companies, slid 4.5 percent.

The collapse of the U.S. mortgage market sparked $950 billion in losses and writedowns at financial companies and now threatens a global economic recession. Central banks in the U.S., U.K. and Japan are among those that have lowered benchmark interest rates to stimulate spending and growth as consumer confidence wanes.

`Significantly Weaker'

Best Buy, the largest U.S. electronics retailer, yesterday slashed its earnings forecast for the year through February, citing a ``seismic'' slowdown in consumer spending. The report preceded Intel Corp.'s announcement that its fourth-quarter sales will be lower than its earlier estimate by about $1 billion amid ``significantly weaker'' demand.

Japan's exports to the U.S., which accounted for about a fifth of the total, fell 11 percent in September, while companies from Sony to Toyota Motor Corp. cut earnings forecasts in the past month.

The yen appreciated against the dollar to as much as 94.52 today from 97.71 at the close of stock trading in Tokyo yesterday, reducing the value of Japanese companies' repatriated sales and threatening deeper cuts in forecasts.

New Facility

Paulson yesterday said he plans to use the second half of the $700 billion financial rescue package to help ease pressure on consumer credit, scrapping a plan to buy devalued mortgage assets. Treasury and Federal Reserve officials are seeking a new ``facility'' to shore up the market for asset-backed securities backed by assets, Paulson said, adding the program would be ``significant in size.''

Crude oil for December delivery declined 5.3 percent to $56.16 a barrel in New York yesterday, the lowest settlement since January 2007. Prices have tumbled 62 percent since reaching a record $147.27 on July 11.

Sharp Corp., Japan's biggest maker of liquid crystal display televisions, will book a $120 million one-time loss in the third quarter, the company said today before markets opened. The company, along with LG Display Co., Chunghwa Picture Tubes, agreed to pay a fine for conspiring to fix prices of displays, the U.S. Justice Department announced.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.