BLBG:Gold Declines With Emerging-Market Stocks Before Fed
Gold fell to the lowest level in almost six weeks, leading precious metals lower, and emerging-market stocks slid before the Federal Reserve decides whether to slow $85 billion of monthly asset purchases. Japanese shares headed for an six-week high.
Gold dropped 1 percent to $1,297.65 an ounce by 2:20 p.m. in Tokyo, declining for a third day, as silver, platinum and palladium were at least 0.6 percent lower. The MSCI Emerging Markets index slipped 0.2 percent, decreasing for first time in three days. Japan’s Topix Index jumped 0.8 percent and Standard & Poor’s 500 Index (SPA) futures added 0.1 percent after the gauge climbed 0.4 percent in New York yesterday. The Bloomberg U.S. Dollar Index had the smallest loss in four days. India’s rupee and the Malaysian ringgit advanced against the U.S. currency.
Analysts are divided on the amount by which the Fed will scale back its monthly asset purchases. Among 64 economists surveyed by Bloomberg News, 33 predict it will reduce its buying of Treasuries by $5 billion or less, with 31 forecasting a cut of $10 billion or more. The Federal Open Market Committee concludes a two-day meeting today as data is forecast to show housing starts in the U.S. rose in August from a month earlier.
“Any sort of announcement, whether its zero tapering or $5 billion or $10 billion is going to have an effect on the market, no matter what,” Nick Maroutsos, the managing director and co-founder of Kapstream Capital Ltd., which oversees about $5 billion, said by phone from Sydney. “What we do know is that it’s going to be a very, very gradual withdrawal of stimulus. We are bullish on equities.”
Commodities Drop
Gold (XPA) headed for the lowest close since Aug. 7 as silver declined 1.4 percent in a third day of losses. Platinum slid to the weakest level since July 18 and palladium fell 1 percent.
Brent crude futures lost 0.1 percent to $108.07 a barrel, while West Texas Intermediate crude was up 0.2 percent at $105.65 after sliding to near a four-week low in a third day of declines yesterday. Gasoline futures slipped 0.1 percent.
The S&P GSCI index of 24 commodities was down 0.1 percent, sliding for a fourth day in the longest losing streak in almost six weeks.
Japan’s Nikkei 225 Stock Average added 1.2 percent while the Hong Kong’s Hang Seng index slid 0.3 percent and the Jakarta Composite index lost 0.6 percent. South Korea is closed for a holiday today and mainland Chinese markets are shut tomorrow and Sept. 20.
New home prices in China’s four major cities rose the most in August since January 2011, led by Guangzhou, amid speculation the government won’t implement new nationwide property curbs any time soon. Prices climbed in 69 of the 70 cities the government tracked last month from a year earlier, the National Bureau of Statistics said in a statement today.
Fed Tapering
Sharp Corp. and Fast Retailing Co. rose more than 2 percent in Tokyo, leading gains in consumer discretionary companies on the Asia-Pacific benchmark index. Kawasaki Heavy Industries Ltd. surged 4.2 percent to near a six-year high after TV Tokyo reported that the Japanese manufacturer secured a 180 billion yen ($1.8 billion) rail-car order.
Speculation over the future of the Fed’s quantitative easing program has whipsawed global assets since May, when Chairman Ben S. Bernanke first signaled cuts may start in 2013. The Fed’s record stimulus, aimed at bolstering the U.S. economy in the wake of the global financial crisis, has helped fuel a $33 trillion jump in the value of global equities from a 2009 low, according to data compiled by Bloomberg.
The 10-year U.S. Treasury yield has averaged 2.18 percent this year, from 4.63 percent in 2007, separate data show. The yield was little changed at 2.84 percent today.
Kiwi, Ringgit
New Zealand’s currency, known as the kiwi, lost 0.1 percent to 82.28 U.S. cents, after jumping 0.8 percent yesterday in its biggest one-day gain since Sept. 6. Malaysia’s ringgit strengthened 0.5 percent to 3.2325 per dollar and India’s rupee gained 0.4 percent to 63.10 against the greenback.
The Bloomberg U.S. Dollar Index, which tracks the greenback against 10 major peers, was little changed after sliding for the previous three sessions.
“Sentiment is now far more cautious and nervous as investors prepare for the U.S. Fed announcement,” Matthew Sherwood, who helps oversee about $25 billion as head of markets research in Sydney at Perpetual Investments, said by e-mail. “The U.S. economy is improving marginally, but investors are concerned about QE tapering.”
To contact the reporters on this story: Pratish Narayanan in Singapore at pnarayanan9@bloomberg.net; Emma O’Brien in Wellington at eobrien6@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
