Asian stocks snapped a three-day gain as the yen traded near a post-World War II high versus the dollar and Morgan Stanley lowered its global growth forecast. U.S. index futures sank, the Swiss franc weakened and wheat slid.
The MSCI Asia Pacific Index lost 1.4 percent as of 3:34 p.m. in Tokyo after gaining 2.8 percent in the previous three days. Standard & Poor’s 500 Index futures declined 0.8 percent and Euro Stoxx 50 Index contracts sank 1.5 percent. Treasury 30-year bonds extended a two-day rally that sent yields down 21 basis points. The yen was little changed at 76.67 per dollar, while the franc weakened against all 16 major peers. Copper slid 0.6 percent, oil lost 0.5 percent and wheat snapped a three-day jump.
Morgan Stanley cut its estimate for global growth to 3.9 percent this year, down from 4.2 percent, while Deutsche Bank AG said China’s economy may expand less than 9 percent in 2011 and 2012. Data showed Japanese exports fell a higher-than-estimated 3.3 percent in July, while U.S. reports will probably show the inflation eased, initial jobless claims rose, and an index of leading indicators climbed at a slower pace. Two Federal Reserve officials yesterday spoke out against unnecessary stimulus.
“Consumers are not going to be there to support continued economic growth,” Komal Sri-Kumar, chief global strategist at TCW Group Inc., said in a Bloomberg Television interview from Los Angeles. “We’re in more defensive positions.”
About five shares retreated for each two that advanced on MSCI’s Asia Pacific index. Losses in the three weeks ended Aug. 12 dragged valuations on the regional index down to 12.1 times estimated profits last week, the lowest since December 2008, according to data compiled by Bloomberg.
Technology, Exports
South Korea’s Kospi Index and Taiwan’s Taiex Index dropped at least 1.6 percent, leading losses in the region, as technology shares slumped. Hynix Semiconductor Inc. (000660) plunged 12 percent in Seoul amid declining computer memory-chip prices.
Japan’s Nikkei 225 Stock Average lost 1.3 percent. Sony Corp., maker of the PlayStation game console, slid 2.4 percent and Nissan Motor Co., which gets a third of its revenue in North America, retreated 3.7 percent. The July drop in exports compared with the median economist forecast of a 2.6 percent decline. Overseas sales decreased 1.6 percent in June.
The yen touched 76.41 per dollar after the stock market closed yesterday in Tokyo, approaching its post-World War II high of 76.25 yen reached on March 17. A stronger yen lowers the value of Japanese exporters’ overseas sales.
The Swiss franc dropped 0.7 percent against the euro and slumped 0.6 percent versus the dollar amid speculation the Swiss National Bank will expand efforts to curb the currency’s strength. The Australian dollar slipped 0.5 percent to $1.05, weakening from a two-week high, as the slump in stocks curbed demand for higher-yielding assets. New Zealand’s currency fell 0.6 percent to 83.28 U.S. cents, snapping a five-day rally.
U.S. Data
Treasury 30-year yields decreased one basis point to 3.55 percent. Economists estimate that Labor Department data today will show consumer prices, excluding volatile food and fuel costs, climbed 0.2 percent, the smallest gain in three months. Initial jobless claims may have climbed to 400,000 last week from 395,000, while the Conference Board’s index of leading indicators probably rose 0.2 percent last month, slowing from 0.3 percent in June.
Figures yesterday showed producer prices climbed more than economists had predicted last month. Treasury-market bets on inflation were one basis point away from an eight-month low before the report on consumer prices.
The difference between yields on 10-year notes and Treasury Inflation Protected Securities, a gauge of trader expectations for consumer prices over the life of the debt, was 2.14 percentage points. The spread narrowed to 2.13 percentage points yesterday, the least since December. The government is scheduled to sell $12 billion of five-year TIPS today.
‘Inappropriate Policy’
Federal Reserve Chairman Ben S. Bernanke’s pledge last week to keep interest rates near zero until mid-2013 was “inappropriate policy at an inappropriate time,” Charles Plosser, president of the Fed Bank of Philadelphia, said yesterday in a Bloomberg radio interview. Dallas Fed President Richard Fisher said the central bank shouldn’t enact policy to protect stock investors. Both officials dissented from the Fed’s Aug. 9 statement.
Futures on the S&P 500 signal the U.S. gauge may snap yesterday’s 0.1 percent advance. The September contract on the FTSE 100 Index, the U.K.’s benchmark stock gauge, dropped 1.1 percent. HSBC Holdings Plc (5), Europe’s largest bank, fell 1.5 percent in Hong Kong trading. Its shares also trade in London.
Bank Scrutiny
U.S. regulators are stepping up scrutiny of local operations for Europe’s largest banks on concern that the region’s sovereign debt crisis may lead to funding problems, the Wall Street Journal reported today. Societe Generale (GLE) SA sank 15 percent on Aug. 10 amid speculation France’s creditworthiness was in doubt, prompting Chief Executive Officer Frederic Oudea to ask the nation’s market regulator for a probe.
Oil for September delivery decreased as much as 0.7 percent to $87 a barrel before trading at $87.23 on the New York Mercantile Exchange, paring some of yesterday’s 1.1 percent increase. Crude supplies climbed 4.23 million barrels last week, an Energy Department report showed. Copper for three-month delivery dropped as much as 0.9 percent to $8,883 a metric ton on the London Metal Exchange.
China’s gross domestic product may rise 8.9 percent this year, down from a previous estimate of 9.1 percent, Deutsche Bank analysts led by Ma Jun wrote in a report yesterday, citing the “shock” of a U.S. and Europe slowdown. They cut their 2012 forecast for GDP expansion to 8.3 percent from 8.6 percent.
Morgan Stanley reduced its 2012 forecast for Chinese growth to 8.7 percent from 9 percent, and lowered its estimate for expansion in the Group of 10 nations to 1.5 percent this year and next, down from previous forecasts of 1.9 percent in 2011 and 2.4 percent in 2012.
Wheat declined 0.6 percent to $7.535 a bushel. Corn and soybean futures declined at least 0.4 percent amid speculation rains in the U.S. Midwest will help ease crop stress in the world’s largest exporter of both commodities.
To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.net
To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net
