BLBG:Dollar Gains as Asian Stocks Snap Five-Day Rally
The dollar strengthened as Asian stocks snapped a five-day advance and metals retreated amid concern China will step up efforts to cool inflation. Wheat and rice led a rally in grains, while Australia’s currency sank.
The Dollar Index added 0.4 percent at 3:02 p.m. in Tokyo, set for the biggest jump in eight days. The Aussie fell 0.6 percent after the central bank left interest rates unchanged. The MSCI Asia Pacific Index slid 0.2 percent, while Euro Stoxx 50 Index futures swung between gains and losses. Standard & Poor’s 500 Index futures declined 0.2 percent while Treasuries climbed after yesterday’s holiday. Zinc dropped 0.8 percent, while wheat and rice increased more than 2 percent.
China still faces “large” inflationary pressure and the central bank will maintain a “prudent” monetary policy, the People’s Bank of China said yesterday, while Moody’s Investors Service said the credit outlook for Chinese banks could decline. Analysts surveyed by Bloomberg News expect the European Central Bank to lift borrowing costs at a meeting this week, after the approval of an aid payment eased concerns of an imminent default by Greece. Data today may show U.S. factory orders rebounded.
“Clearly, there are still a lot of concerns in the global economy,” Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion, said in a Bloomberg Television interview. “People are still fairly cautious.”
The dollar strengthened against 14 of its 16 most actively traded peers and climbed 0.3 percent to 81.03 yen. The U.S. currency rallied 0.5 percent to $1.4473 per euro. It reached a three-week low of $1.4578 yesterday after the approval of an aid payment to Greece fueled optimism the indebted nation will avert a default for now.
Aussie, Kiwi
The Australian dollar retreated to $1.0675 from $1.0734 yesterday after the Reserve Bank held rates for a seventh straight meeting and said growth this year is “unlikely to be as strong as earlier forecast.” South Korea’s won retreated 0.3 percent to 1,066.15 per dollar, while New Zealand’s currency slid 0.1 percent to 82.86 U.S. cents after earlier climbing to an all-time high.
MSCI’s Asia Pacific Index is declining after a five-day, 4.9 percent gain that was its longest rally in six months. The Shanghai Composite fell 0.1 percent after yesterday climbing to the highest since May 20. Australia’s S&P/ASX 200 Index lost 0.2 percent, while South Korea’s Kospi Index gained 0.4 percent.
Inotera Memories Inc. (3474) and Nanya Technology Corp. sank more than 4 percent after the Taiwanese chipmakers posted lower June sales. Tokyo Electric Power Co. jumped 4.3 percent after the utility said a self-contained cooling system that had been malfunctioning is working more smoothly at its crippled Fukushima Dai-Ichi nuclear plant.
China Banks, Prices
Agricultural Bank of China Ltd. (601288) lost 1.1 percent in Shanghai after Moody’s said bank loans to local governments may be 3.5 trillion yuan ($540 billion) more than estimated and the outlook for the industry is potentially turning negative. Policy makers are likely to raise interest rates this weekend and consumer price increases may hit 6.2 percent in June, the Economic Information Daily reported, citing analyst estimates.
“China remains at the forefront of investors’ minds given its increasingly large contribution to global growth,” said Tim Schroeders, who helps manage $1 billion in global equities as a portfolio manager at Pengana Capital Ltd. in Melbourne. “Any slowdown in the rate of growth has heightened flow-on effects to growth expectations, not only in China but globally.”
Futures on the S&P 500 indicate the gauge may trim some of last week’s 5.6 percent rally, the steepest weekly gain in about two years. Treasuries halted a five-day slide, with yields on 10-year retreating two basis points to 3.16 percent.
U.S. Data
U.S. factory orders likely increased 1 percent in May following a 1.2 percent decline the previous month, according to the median estimate of economists surveyed by Bloomberg before the report today. Separate data this week may show employment increased in June, while growth in services cooled.
The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan declined 1.5 basis points to 107.5 basis points, according to Royal Bank of Scotland Group Plc prices. The gauge was on course for its lowest close since May 20, down from the nine-month high of 120 basis points on June 27, according to CMA prices.
Zinc paced a drop among metals, sliding as much as 1.2 percent to $2,369 a metric ton on the London Metal Exchange. Copper fell for the first time in six days. Rice for September delivery climbed 2.5 percent to $15.28 per 100 pounds, while wheat increased 2.1 percent to $6.2525 a bushel, halting a two- day, 9.2 percent slump.
To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.net.
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
