BLBG:Asian Stocks, Aussie Dollar Drop on Fed; Copper Falls
Asian stocks fell the most in seven weeks as commodities dropped and the Australian dollar weakened after a report signaled the Federal Reserve may refrain from more monetary stimulus and Australia’s services industry shrank.
The MSCI Asia Pacific Index (MXAP) declined 1.4 percent as of 2:09 p.m. in Tokyo. The Nikkei 225 Stock Average slumped 1.9 percent and Standard & Poor’s 500 Index futures lost 0.4 percent. The Australian dollar weakened 0.6 percent and the won slid against all of its major counterparts. The S&P GSCI Index of commodities retreated 0.3 percent and nickel tumbled 2.4 percent.
Minutes released yesterday from the March 13 Fed policy meeting showed it was holding off on increasing monetary accommodation unless the economic expansion faltered or prices rose at a rate slower than its 2 percent target. Australia’s services industry shrank in March, the fifth contraction in the six months, a private survey showed. China accelerated the opening of its capital markets by more than doubling the amount foreigners can invest in stocks, bonds and bank deposits.
“The perception is that you’re taking away the safety net of excess liquidity that lifted asset prices and at the same time the prospects for growth that beat expectations aren’t that good,” said Tim Schroeders, who helps manage $1 billion at Pengana Capital Ltd. in Melbourne. “Given the exceptionally good run we’ve had year-to-date, people are reassessing their risk-reward scenarios.”
Asian Stocks Retreat
The MSCI Asia Pacific Index has rallied 10 percent this year after a 17 percent plunge in 2011. About four stocks fell for each that gained in the equity benchmark. South Korea’s Kospi Index retreated 1.5 percent and Australia’s S&P/ASX 200 slipped 0.1 percent. The BSE India Sensitive Index, or Sensex, retreated 0.6 percent. Markets in China, Taiwan and Hong Kong are closed for holidays.
The China Securities Regulatory Commission increased the quotas for qualified foreign institutional investors to $80 billion from $30 billion, according to a statement on its website yesterday. Offshore investors will also be allowed to pump an extra 50 billion yuan ($7.95 billion) of local currency into the country, up from 20 billion yuan.
The dollar rose 0.3 percent against the euro as signs of improving employment supported the Fed’s decision to hold off from boosting stimulus. Figures based on payrolls from ADP Employer Services due to be published today may show U.S. employment increased by 206,000 last month, estimates from economists surveyed by Bloomberg show. That compares with a gain of 216,000 in February, the biggest in two months.
No Justification
U.S. equities fell yesterday as the Fed minutes showed decreased urgency to add stimulus. The Fed last month affirmed its plan, first announced in January, to hold interest rates near zero through late 2014 as the economy may fail to grow fast enough to continue bringing down the unemployment rate.
“There’s no justification for the Fed to ease monetary policy further,” Vasu Menon, vice president for wealth management at Oversea-Chinese Banking Corp., said in a Bloomberg Television interview from Singapore. “The market has run up at a very heavy pace, so I think a breather or a correction would be a welcome change for now.”
SK Telecom Co. (017670) slid 3.2 percent in Seoul after Posco sold shares in the mobile-phone carrier. Toshiba Corp. retreated 2.8 percent. Westinghouse Electric Co., the nuclear-reactor designer and subsidiary of Toshiba, said Chief Executive Officer Jim Ferland resigned two days after taking office.
Fast Retailing Co., Japan’s biggest clothier, sank 4.7 percent. Credit Suisse Group AG said sales at the retailer’s Uniqlo stores in Japan failed to recover following last year’s March 11 earthquake. The clothier yesterday reported domestic same-store sales at the chain increased 5.1 percent last month from a year earlier.
South Korea’s Bonds
The won slid 0.5 percent to 1,127.68 per dollar. The yield on Korea’s 3.25 percent bonds due December 2014 climbed two basis points to 3.57 percent, Korea Exchange Inc. prices show.
Copper declined 1.3 percent in London as increasing stockpiles signaled weaker demand. Stockpiles monitored by the London Metal Exchange rose for a third-straight session yesterday after falling to the lowest since 2008 last month. Inventories tracked by the Shanghai Futures Exchange were close to the highest level since at least 2003 in March. Nickel and zinc fell at least 1.6 percent.
Corn rose 0.5 percent for a fourth day of gains, the longest winning run in more than a month. Quarterly inventories fell to an eight-year low in the U.S., the top exporter, a report from the U.S. Department of Agriculture showed.
To contact the reporters on this story: Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net; Jason Clenfield in Tokyo at jclenfield@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
