BLBG:Asian Equities Drop, Gold Rises as Euro Holds Near Two-Month Low
Asian stocks fell, while gold traded near a three-week high, after Japan’s economy shrank at the fastest pace since last year’s earthquake. The euro held losses before European officials meet to discuss Greek aid.
The MSCI Asia Pacific Index (MXAP) dropped 0.3 percent at 2:35 p.m. in Tokyo, while Japan’s Nikkei 225 Stock Average retreated 0.8 percent. Standard & Poor’s 500 Index futures added 0.1 percent. Gold added 0.2 percent to $1,734.75, extending its best week since August. The euro bought $1.2728. Soybeans fell 1.6 percent to $14.28 a bushel, touching the lowest in four months.
Japan’s economy, which contracted in the three months through September as a territorial dispute with China dragged on exports, will also shrink this quarter, economists said. China’s exports beat estimates last month and a quota will be increased to allow more yuan raised overseas to be invested in domestic stock and bond markets. Greek lawmakers passed a 2013 budget needed to unlock bailout funds before a meeting of euro-area finance chiefs today in Brussels.
“I don’t think anyone’s relying on a massive pick-up in Japanese growth to drive things,” said Angus Gluskie, managing director at Sydney-based White Funds Management, which oversees more than $350 million. “If the data continues to deteriorate, it becomes another problem area and it will come onto investors’ radar screens.”
Lawmakers from both major U.S. parties and investors including Pacific Investment Management Co. predicted a resolution to the standoff on the so-called fiscal cliff that threatens to trigger $607 billion in tax increases and spending cuts. Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat, said a “framework agreement” can be reached. Pimco, which runs the world’s largest bond fund, sees as much as a 70 percent chance a compromise will be struck.
Fiscal Cliff
Markets are closed in the U.S. today for a national holiday. Yields on 10-year Treasuries lost 11 basis points last week to 1.61 percent, the lowest since Sept. 5. The S&P 500 fell 2.4 percent in the week, the worst slide since June.
About two shares fell for each that rose on the Asia- Pacific index, which is headed for its lowest close since Oct. 15. The gauge traded at 13.3 times estimated earnings, compared with 13.3 for the S&P 500 and 12.1 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Hong Kong’s Hang Seng Index advanced 0.1 percent after China’s exports increased 11.6 percent from a year earlier. The number, released by the Beijing-based customs administration on Nov. 10, compared with a 10 percent estimate in a Bloomberg News survey of economists and was the fastest rate since May.
Sony Corp. declined 2.5 percent in Tokyo after the electronics maker’s rating was cut to the lowest investment level of Baa3 at Moody’s Investors Service. Lynas Corp., an Australian miner that’s building the world’s largest rare-earth refinery, fell 11 percent after selling A$150 million ($156 million) of new shares.
Apple Lawsuit
QBE Insurance Group Ltd. sank 8.3 percent, the most since January after Australia’s largest insurer by market value said it will issue debt due to losses from Hurricane Sandy in the U.S. HTC Corp. climbed 6.9 percent in Taiwan after the smartphone maker and Apple Inc. settled lawsuits.
Soybeans dropped to the lowest price in more than four months after the U.S. government raised its estimates for global inventories, boosted by higher yields than forecast a month earlier. The oilseed for delivery in January lost as much as 1.9 percent to $14.235 a bushel on the Chicago Board of Trade, the lowest level for the most-active contract since June 29. Wheat dropped 0.5 percent and corn slipped 0.1 percent.
Yuan Gains
China’s yuan strengthened 0.26 percent, the most in six weeks, to 6.2291 per dollar after the central bank raised its reference rate. The currency climbed to a 19-year high, testing the upper limit of its permitted trading band around the People’s Bank of China’s daily fixing.
The securities regulator said China will increase the quota for its Renminbi Qualified Foreign Institutional Investor program that allows yuan raised overseas to be invested in stocks and bonds in domestic markets.
The euro traded 0.3 percent from a two-month low before European finance chiefs meet today to seek a program to maintain Greek solvency. The currency was at $1.2728 from $1.2714 at the Nov. 9 close, when it touched $1.2690, the lowest since Sept. 7.
The yen weakened against most of its major peers after the Cabinet Office in Tokyo said Japan’s economy shrank an annualized 3.5 percent in the three months through September. Economists estimated a 3.4 percent contraction. The Japanese currency was little changed at 79.50 per dollar.
To contact the reporter on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
