BLBG: Asia Stocks Fall on Economy Concern; Yen Strengthens
Asian stocks fell, led by the Nikkei 225 Stock Average’s biggest drop in three months, after U.S. incomes grew slower than estimated and Hon Hai Precision Industry Co.’s profit missed analysts’ targets. The yen strengthened and copper slumped.
The MSCI Asia Pacific Index sank 1.7 percent to 116.32 as of 3:05 p.m. in Tokyo. Japan’s Nikkei 225 slumped 3.5 percent. Standard & Poor’s 500 Index futures slid 0.2 percent after the gauge lost 1.5 percent yesterday, and futures for the Euro Stoxx 50 decreased 1.4 percent. The yen rose to 84.15 per dollar in Tokyo from 84.62 in New York and appreciated to 106.40 yen per euro from 107.14. Copper futures in New York sank 1.7 percent to $3.3560 a pound, snapping three days of gains.
Investors became more risk averse after U.S. government data showed personal income growth last month failed to keep up with the biggest increase in consumer spending since March. Earnings from Taiwan’s Hon Hai, the maker of Apple Inc.’s iPhones and iPads, offset faster growth from Chinese companies led by China Railway Construction Corp. and Daqin Railway Co.
“The market is fearful if soft economic data will persist or if this is just a mid-cycle slowdown,” said Sim Moh Siong, a currency strategist at Bank of Singapore Ltd. “There’s scope for more stimulus measures and the market is frustrated because policy makers are not prepared to pull the trigger just yet.”
About seven stocks dropped for each that advanced in the MSCI Asia Pacific Index, which climbed 2.1 percent in the past three days. Hong Kong’s Hang Seng Index and South Korea’s Kospi sank 1.1 percent. Taiwan’s Taiex index declined 1.6 percent.
Not Enough Stimulus
The Nikkei is headed for its biggest slump since June 7 amid concerns stimulus measures announced yesterday by the Bank of Japan and Prime Minister Naoto Kan will fail to halt an appreciation in the yen and bolster economic growth.
The yen extended a fourth monthly gain versus the dollar, the longest winning streak in more than 1 1/2 years, as growth concerns boosted demand for the currencies as a refuge. Japan’s currency has strengthened 2.5 percent against the greenback since July 31 and was set to complete monthly advances against its 16 major counterparts.
“I haven’t really changed my position because it’s not like the stimulus measures had a huge impact,” said Junichi Misawa, head of equity investment at Tokyo-based STB Asset Management Co., which oversees about $14 billion. “There was a faint hope in the market that the BOJ would do more.”
In Taipei, Hon Hai sank 6.6 percent, the biggest drop since July 23. Second-quarter net income for the world’s largest contract manufacturer of electronics fell short of analyst estimates after it raised wages following a spate of suicides among workers in China.
Tech, Resources
Foxconn International Holdings Ltd., the world’s biggest contract maker of mobile-phones, tumbled 8.3 percent after reporting a wider first-half loss. A gauge of technology stocks in the MSCI Asia Pacific Index slumped 2.5 percent, the most of 10 industry groups.
Raw-material and energy companies accounted for about 15 percent of the MSCI Asia Pacific Index’s decline after copper and oil prices fell. Oil futures in New York lost 1.3 percent to $73.71 a barrel, adding to yesterday’s 0.6 percent drop.
BHP Billiton, the world’s largest mining company, slipped 2.2 percent in Sydney. Japan’s Mitsubishi Corp., which trades commodities, slumped 3.2 percent. PetroChina Co., China’s largest oil producer, declined 1.4 percent in Hong Kong.
“The past couple of weeks have been clouded by talk of a double-dip recession,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “Until we get some macro-news that is more consistent, these markets are going to be a bit choppy.”
U.S. Spending, Jobs
Concerns about global growth grew after a government report showed U.S. incomes increased 0.2 percent in July, less than the 0.3 percent projected by economists. Consumer spending rose 0.4 percent, the most since March, after little change the prior month, separate figures showed.
U.S. employers cut 100,000 positions in August after a reduction of 131,000 in the previous month, according to the median forecast of 72 economists in a Bloomberg News survey before a Sept. 3 report from the Labor Department. The jobless rate probably rose to 9.6 percent this month from 9.5 percent.
“Worries that economies worldwide are cooling are prevailing,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. Ltd. in Tokyo. “The Swiss franc along with the yen are likely to remain popular safe-haven plays.”
The Swiss franc climbed to a record high of 1.2934 per euro before trading at 1.2953 from 1.2993 yesterday. The New Zealand dollar fell to 70.09 U.S. cents from 70.71 cents and slid to 58.97 yen from 59.83 after South Canterbury Finance Ltd., an institution with about $1.12 billion of assets, filed for receivership.
South Korea’s won weakened 0.6 percent to 1,198.83 per dollar as a government report today showed the country’s factory production rose in July at the slowest pace in nine months.
To contact the reporter for this story: Darren Boey at dboey@bloomberg.net; David Yong in Singapore at dyong@bloomberg.net.
