BLBG:Asian Stocks, Oil Fall As Bernanke Overshadows China Cut
European stock futures and Asian shares fell, the euro weakened and oil headed for the longest weekly losing streak in 13 years after Federal Reserve Chairman Ben S. Bernanke damped expectations for monetary stimulus and German exports dropped. U.S. Treasuries and the yen rallied.
Euro Stoxx 50 Index futures slid 0.8 percent at 7:06 a.m. in London, while those for the Standard & Poor’s 500 Index lost 0.7 percent. The MSCI Asia Pacific Index (MXAP) sank 1.3 percent, paring its first weekly gain since April. The euro fell 0.5 percent. Oil sank 2.2 percent, poised for a sixth week of declines. The S&P GSCI gauge of commodities fell 1.6 percent.
Global stocks rallied this week as speculation mounted that policy makers would act to spur growth. Bernanke said the Fed will need to assess conditions before deciding if more measures are required to stoke an economy threatened by Europe’s debt crisis and U.S. budget cuts. German exports declined in April for the first time this year, a report showed. Chinese shares fell in Hong Kong as the nation’s first interest-cut since 2008 intensified concern its economic slowdown is deepening.
“The key issue really is around European sovereign debt and having some permanent resolution,” said Donald Williams, chief investment officer at Platypus Asset Management Ltd. that manages about $1 billion. “Even though China’s rate cut was unexpected, people are selling because it confirms in their minds that the growth outlook is problematic.”
Japan, Hong Kong
In his prepared comments, the Fed chairman didn’t call for consideration of additional stimulus, a contrast with a speech earlier this week in which Vice Chairman Janet Yellen said the economy “remains vulnerable to setbacks” and may warrant more accommodation.
Japan’s Nikkei 225 Stock Average tumbled 2.1 percent. Sony Corp. (6758), Japan’s biggest exporter of consumer electronics, slid 5.3 percent as the yen climbed while South Korean rival Samsung Electronics Co. (005930) lost 1.4 percent. The Hang Seng China Enterprises Index retreated 1 percent to near a seven-month low. Anhui Conch Cement Co. (914) slumped 3.3 percent in Hong Kong after saying first-half profit may drop “considerably.”
Chinese data tomorrow may show fixed-asset investment expanded at the slowest pace in a decade in May, inflation matched a two-year low and industrial output grew less than 10 percent, according to Bloomberg surveys of economists.
Today’s share losses come after the MSCI Asia Pacific Index climbed 1.6 percent this week through yesterday. The gauge plunged 14 percent from a six-month high in February through last week as U.S. economic data trailed estimates and concern grew about Greece’s future in the euro and Spain’s deteriorating national finances.
Central Banks
Policy makers are being pressed into action to shore up a global economy that is suffering its steepest slowdown since the recession ended in 2009.
The People’s Bank of China said overnight it will lower its benchmark lending and deposit rates by 25 basis points from today. The decision follows an Australian interest-rate cut on June 5. European Central Bank President Mario Draghi left the door open at a June 6 press conference to a rate cut, while highlighting the limitations of the ECB’s tools in countering the region’s financial turmoil.
The Bank of Korea held off from altering borrowing costs for a 12th-straight month today.
The global economy will grow 1.7 percent this quarter and 2 percent next, after expanding at an annual pace of 2.5 percent in the final quarter of 2011, economists at JPMorgan Chase & Co. in New York said in a June 1 report. The result is “an extended soft patch as weak as anything experienced in the past two decades outside the Great Recession,” they wrote.
European Data
German exports, adjusted for work days and seasonal changes, fell 1.7 percent from March, the Federal Statistics Office said today. Economists forecast a drop of 0.7 percent, according to the median of 14 estimates in a Bloomberg survey. Italy will today release industrial production data for April, which is forecast to decline, a separate survey showed.
The euro dropped 0.5 percent to $1.2502. The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners, rose 0.3 percent to 82.528. The yen gained 1 percent to 99.03 per euro and added 0.5 percent to 79.21 per dollar.
U.S. Treasuries rose, with the 10-year yield sliding three basis points, or 0.03 percentage point, to 1.61 percent. Japan’s 10-year rate declined three basis points to 0.85 percent.
Japan’s gross domestic product grew an annualized 4.7 percent in the three months ended March 31, the Cabinet Office said today, compared with a preliminary estimate for a 4.1 percent expansion.
China, Commodities
Copper fell 2.2 percent, zinc tumbled 1.4 percent and nickel slid 1.6 percent. Oil fell to $82.86. Global crude supply is sufficient, Youcef Yousfi, Algeria’s energy minister, said yesterday before the Organization of Petroleum Exporting Countries, which supplies about 40 percent of the world’s crude, meets next week in Vienna to review output targets.
The Markit iTraxx Japan index increased 4 basis points to 191 basis points, Citigroup Inc. prices show. The benchmark is headed for the biggest one-day gain since June 1, according to data provider CMA. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan climbed 2 basis points to 194.5 basis points, Standard Chartered Plc prices show.
Credit-default swap indexes are benchmarks for protecting bonds against default and traders use them to speculate on credit quality. A drop signals improving perceptions of creditworthiness, while an increase suggests the opposite.
To contact the reporters on this story: Richard Frost in Hong Kong at rfrost4@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
