BLBG:Euro Weakens With Asian Stocks as Aussie Touches Low
Stocks, commodities and the euro dropped before the region’s finance ministers meet to discuss Spain. The Australian dollar touched a three-month low while Chinese shares fell as the market opened after a week’s holiday.
The Stoxx 600 Index retreated 0.7 percent at 8:05 a.m. in London, and futures on the Standard & Poor’s 500 Index lost 0.2 percent. The MSCI Asia Pacific Excluding Japan Index was down 0.9 percent and China’s CSI 300 Index tumbled 1 percent. The S&P GSCI Index of commodities declined 0.7 percent. The euro slipped 0.5 percent to $1.2979. The Aussie dropped to $1.0150, the lowest since July 13. Japan’s markets are shut for a holiday and U.S. Treasuries aren’t trading because of Columbus Day.
European finance ministers will meet in Luxembourg to discuss Spain’s finances and closer banking cooperation, while German Chancellor Angela Merkel visits Greece tomorrow for the first time since the crisis erupted. Growth in developing East Asia will probably ease to an 11-year low of 7.2 percent this year, the World Bank estimates. Alcoa Inc. (AA) unofficially starts the U.S. earnings season with the release of its third-quarter numbers tomorrow, the fifth anniversary of the record highs in the S&P 500 and Dow Jones Industrial Average.
“The austerity that has been imposed upon Greece is now in danger of coming through to other parts of southern Europe,” Stephen King, the chief economist at HSBC Holdings Plc, said in Hong Kong on Bloomberg Television’s “First Up.” “The southern European shock has now had a very sizable impact and world trade has slowed decisively through the course of this year.”
German Bunds
The yield on German 10-year government bonds fell three basis points to 1.49 percent as reports today may show German industrial production fell in August and French business confidence slipped last month.
The euro weakened against most of its 16 major counterparts, dropping 0.6 percent to 101.99 yen. Ministers from all 27 nations in the European Union meet tomorrow while Spanish Prime Minister Mariano Rajoy will travel to Paris on Oct. 10 for talks with French President Francois Hollande. The Dollar Index, a gauge against six major peers, rose 0.3 percent.
Australia’s dollar fell 0.2 percent to $1.0166 amid prospects that the Reserve Bank will reduce its key rate next month following a cut last week. Treasurer Wayne Swan said yesterday that reduced interest rates will help Australia weather deteriorating conditions in the world economy.
Asian Stocks
More than two stocks fell for every one that rose on the MSCI Asia Pacific Excluding Japan Index, which is heading for its first decline in three days. LG Display Co. (034220), the world’s second-largest maker of liquid-crystal displays that gets about 18 percent of sales from Europe, tumbled 1.5 percent in Seoul.
The Shanghai Composite Index (SHCOMP) dropped 0.6 percent as weak economic data outweighed an increase in tourism sales during the so-called Golden Week holiday last week. The last time China’s stocks were this cheap in 2008, the benchmark index rose 83 percent in a year. Now is different as policy makers struggle to reverse the worst slowdown in more than a decade, the most- accurate strategists say.
Data last week showed China’s official Purchasing Managers’ Index contracted a second month in September for the first time since 2009, while the nation’s non-manufacturing industries expanded last month at the weakest pace since at least March 2011. Still, China’s major attractions saw an average 23 percent increase in tourism sales from a year ago during the first six days of the Golden Week holiday, industry regulator data showed.
Oil, Copper
“During the previous crisis back in 2009, China acted as an incredible counterweight to the western difficulties with this huge infrastructure boost,” said HSBC’s King. “We’re not seeing this same kind of boost from China this time around. Everyone exposed to southern Europe is not benefiting from a China boom and that’s really hitting world trade.”
China’s yuan touched 6.2812, the strongest level since the country unified official and market exchange rates at the end of 1993. The government may introduce more stimulus measures at the Chinese Communist Party’s 18th congress starting Nov. 8, according to research notes last week from Mizuho Securities Asia Ltd. and Australian & New Zealand Banking Group Ltd.
Oil, copper and gold declined for a second day on concern Europe’s debt crisis will continue to weigh on global growth and hurt raw-material demand. Crude slumped 1 percent to $88.99 a barrel, copper in London tumbled 1.4 percent to $8,180 a metric ton, while spot gold slid 0.6 percent to $1,770.80 an ounce.
Growth in developing East Asia, which excludes Japan and India, will probably ease this year from 8.3 percent in 2011, on a slowdown in China, the Washington-based World Bank said in a report today. That’s the slowest pace since 2001, according to bank data, and lower than a forecast in May of 7.6 percent. The International Monetary Fund is set to revise down its global outlook for this year at an annual meeting in Tokyo tomorrow.
To contact the reporters on this story: Glenys Sim in Singapore at gsim4@bloomberg.net; Masaki Kondo in Singapore at mkondo3@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
