BLBG:Asian Stocks Fall, Oil Rises; Yen Breaches 80 Per Dollar
Asian stocks fell for a third day as Japanese utilities plunged. The yen weakened past 80 against the dollar for the first time since July amid speculation the Bank of Japan (8301) will add to stimulus.
The MSCI Asia Pacific Index (MXAP) lost 0.3 percent as of as 2:34 p.m. in Tokyo, where power producers slid on a report Kansai Electric Power (9305) Co. won’t pay a dividend for the first time in 61 years. Standard & Poor’s 500 Index futures declined 0.1 percent. The yen touched 80.01 per dollar, the weakest since July 6, before trading at 79.94. Oil advanced as much as 64 cents to $89.29 a barrel after yesterday falling to a two-week low.
A report this week is expected to show declining Japanese consumer prices, adding pressure on the BOJ to ease policy after the nation’s exports dropped in September. Japan may extend a dollar-loan program for companies, Vice-Finance Minister Tsutomu Okubo said. Computer maker Acer Inc. (2353) posted profit that missed estimates, while Caterpillar Inc., the world’s largest maker of construction equipment, forecast slowing revenue growth.
“Markets have had a big run up in a short period of time in reaction to stimulus out of the U.S. and Europe, and what we’re seeing now is investors asking whether current valuations are appropriate,” said Tim Schroeders, a portfolio manager who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “At this stage of earnings season, it’s a mixed bag with no clear direction.”
Of the 42 companies on the MSCI Asia Pacific Index that reported quarterly earnings since Oct. 1, about 60 percent missed analyst estimates, according to data compiled by Bloomberg News. More than 100 companies in Australia, China, India, Japan, South Korea and Taiwan are scheduled to post results this week.
Stimulus Rally
Almost five stocks fell for every three that rose on the MSCI Asia Pacific Index. The gauge rebounded 13 percent from this year’s low on June 4 through yesterday as stimulus measures in the U.S., Japan and China boosted market sentiment amid a global economic slowdown and Europe’s debt crisis.
Asia’s benchmark equities index trades at 13 times estimated earnings, compared with 13.7 for the S&P 500 Index and 12.2 for the Stoxx Europe 600 Index.
Kansai Electric Power sank 12 percent after the Nikkei newspaper reported the Japanese utility won’t pay a dividend for the first time in 61 years as the cost of fuel to cover halted nuclear reactors squeezes earnings. The utility said in a release it hasn’t decided on the payout.
Acer slid 3.5 percent today in Taipei after Asia’s second- largest computer maker posted third-quarter profit that missed estimates. LG Display Co., the world’s No. 2 maker of liquid- crystal displays, climbed 2.7 percent in Seoul after a U.S. court ruled that it didn’t violate a patent owned by Industrial Technology Research Institute.
Japan Deflation
The yen was little changed at 79.94 per dollar, snapping an eight-day slide, the longest drop since July 2005. It earlier touched its lowest since July 6. The Japanese currency increased to 104.37 per euro from 104.41, after reaching 104.59, the least since May 4. The euro was little changed at $1.3056 after adding 0.3 percent yesterday.
A government report on Oct. 26 will probably show that so- called core consumer prices in Japan declined in September for a fifth-straight month, according the economists surveyed by Bloomberg News. That compares with the central bank’s goal for inflation of 1 percent.
“The yen has been sold since last week amid expectations the BOJ will ease policy,” said Noriaki Murao, New York-based managing director of the marketing group at the Bank of Tokyo- Mitsubishi UFJ Ltd., a unit of Japan’s biggest financial group by market value. “It would make sense for the BOJ to take action if they revise down their inflation outlook.”
Dollar-Loan Program
Japan may extend its dollar-loan program beyond March 31 to help companies buy overseas assets and stem the yen’s rise, Vice-Finance Minister Tsutomu Okubo, said in an interview yesterday in Tokyo. The facility, which provides dollars from Japan’s foreign-exchange reserve, has so far pledged or lent 2.5 trillion yen to help fund 43 deals, according to the finance ministry.
Oil rose for the first time in four days amid signs that yesterday’s slide to the lowest level in more than two weeks was excessive and after TransCanada Corp. (TRP) said it won’t resume full deliveries on the Keystone pipeline until next month. Crude for December delivery rose 7 cents, or 0.1 percent, to $88.80 a barrel in New York. The November contract fell 1.5 percent yesterday in its last day of trading to $88.73, the lowest close since Oct. 3.
To contact the reporters on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net; Jonathan Burgos in Singapore at jburgos4@bloomberg.net
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
