BLBG: Emerging Currencies, Asian Stocks Fall on Portugal Debt Concern
By Will McSheehy and Shani Raja
March 25 (Bloomberg) -- Emerging market currencies, stocks and metals fell while bond risk rose in Asia after Fitch Ratings downgraded Portugal, deepening concern Greece’s fiscal crisis will spread to other countries.
The South Korean and the Philippine currencies led declines against the dollar as the won fell 0.3 percent and the peso dropped 0.2 percent. Five stocks fell for every three that rose on the MSCI Asia Pacific Index, aluminum dropped for a second day and the region’s benchmark credit-default swap indexes rose.
European leaders meeting today will seek to end weeks of wrangling over an aid package for Greece as the debt-laden nation grapples with the European Union’s biggest budget deficit. Concern about the continent’s weakest economies increased yesterday after Fitch cut Portugal’s credit rating for the first time, citing “structural weaknesses” that are reducing its ability to tolerate the global economic downturn.
“There’s nervousness surrounding the Portugal downgrade,” said Nader Naeimi, an investment strategist in Sydney at AMP Capital Investors, which oversees about $90 billion globally. “The last thing the EU wants is any contagion of the Greece situation to the rest of the region.”
MSCI’s Asia gauge fell 0.1 percent to 123.55 at 11:17 a.m. in Singapore, declining for a second day. Hong Kong’s Hang Seng Index dropped 1.3 percent, the biggest decline among major markets in the region. Futures on the U.S. Standard & Poor’s 500 Index dropped less than 0.1 percent.
Li & Fung Ltd., the biggest supplier for retailers including Wal-Mart Stores Inc., slumped 9.8 percent after reporting lower-than-expected 2009 profit, while China Unicom Ltd., China’s No. 2 mobile-phone company, sank 4.3 percent in Hong Kong. Newcrest Mining Ltd. dropped 1.5 percent in Sydney after gold tumbled to the lowest price in more than five weeks.
Credit Swaps
The Markit iTraxx Australia index of credit swaps climbed 3.5 basis points to 87 basis points in Sydney, Deutsche Bank AG prices show. The risk benchmark is heading for its largest increase since Feb. 23, according to CMA DataVision in New York. The Markit iTraxx Japan index rose 4.5 basis points to 121.5 in Tokyo, Morgan Stanley prices show.
Aluminum dropped for a second day, declining 1.1 percent to $2,198 per metric ton. Copper for three-month delivery fell as much as 0.4 percent to $7,344 a ton and traded at $7,350 at 10:22 a.m. Singapore time. Gold for immediate delivery gained 0.2 percent to $1,088.35 an ounce following a decline yesterday to $1,085.30 an ounce, the lowest since Feb. 12.
Japan’s currency strengthened versus all its 16 most-active counterparts after charts showed its 2.1 percent slump yesterday versus the dollar was overdone. The yen rose from a 10-week low against the dollar on speculation Japanese exporters took advantage of its biggest slide this year to buy the currency before the nation’s fiscal year ends next week.
Exporter Buying
“With the dollar-yen having risen to more than a one-month high, exporters probably want to buy the yen,” said Yoh Nihei, trading group manager at Tokai Tokyo Securities Co. in Tokyo. “There’s talk of actual demand from exporters for the yen.”
The won fell 0.3 percent to 1,141.05 against the dollar, the Malaysian ringgit weakened 0.1 percent to 3.3270 and the Philippine peso dropped 0.2 percent to 45.643. The euro traded near a 10-month low against the greenback and near a record low against the Swiss franc ahead of the start of the two-day EU meeting in Brussels.
China’s Shanghai Composite Index fell 0.8 percent, the most in a week, as concern about the global recovery hurt commodity producers and investors cut equity holdings on speculation the government will step up efforts to cool asset prices.
Jiangxi Copper Co. lost 1.4 percent to a one-week low, Shandong Gold Mining Co. dropped 1.6 percent and Angang Steel Co. declined 1.9 percent after prices of iron ore imports rose. PetroChina Co., the nation’s largest oil producer, slid 0.6 percent, declining for a fourth day.
Crude Supplies
Oil dropped for a second day in New York after a government report showed a bigger-than-forecast increase in crude supplies in the U.S., the world’s biggest energy consumer.
Oil declined 0.3 percent to $80.34 a barrel, adding to yesterday’s 1.6 percent slump, after the Energy Department said crude stockpiles rose 7.25 million barrels to 351.3 million last week. That was more than four times the gain estimated in a Bloomberg News survey.
“The U.S. looks like it’s facing a very slow and uneven recovery,” said Toby Hassall, a research analyst at CWA Global Markets Pty. in Sydney. “U.S. oil demand has struggled to improve after the contraction caused by the downturn.”
To contact the reporters on this story: Will McSheehy in Singapore at wmcsheehy@bloomberg.netShani Raja in Sydney at sraja4@bloomberg.net
