Asia Stocks Fall as Japan Slips; Oil Gains With Palladium

07-Jan-2014 Intellasia | Bloomberg | 6:00 AM Print This Post

Asian stocks fell, led by Chinese and Japanese shares, as a private services report pointed to slower growth in the world’s second-largest economy. Natural gas and wheat climbed as the coldest air in two decades sweeps across the US

The MSCI Asia Pacific Index retreated 0.8 percent by 11:55 a.m. in Tokyo as a gauge of Chinese shares in Hong Kong slid 1.7 percent. The Topix lost 1 percent and rubber sank 4.4 percent in Tokyo as Japan’s markets reopened after four days. Standard & Poor’s 500 Index (SPX) futures were little changed. The yen gained against all major peers, while the won led emerging currencies lower. Natural gas, 2013′s biggest gainer on the S&P GSCI Index of 24 commodities, rose 1.2 percent. Wheat added 0.5 percent.

An index of China’s non-manufacturing sector fell, while private reports on services industries for India to Germany and the US are also due today. Natural gas futures are extending a 23 percent jump since November 1 as temperatures plunge in the US, boosting fuel prices and damaging crops. Janet Yellen is poised for confirmation by the Senate today as head of the Federal Reserve, which begins reducing bond-buying this month.

This year “is going to be a year of consolidation,” Matthew Sherwood, head of investment-markets research in Sydney at Perpetual Investments, which manages about $25 billion, said by telephone. “China’s growth is slowing down structurally. Our expectation out of China’s economy is it will grow just over 7 percent this year.”

Chinese Services

About three stocks fell for each that rose on the MSCI’s Asian gauge, which is headed for a third day of losses. Japan’s Nikkei 225 Stock Average had the biggest advance among 24 developed markets tracked by Bloomberg last year as the yen weakened 18 percent, the most since 1979. Japan’s (NKY) Topix jumped 51 percent in 2013, the most since 1999.

The Shanghai Composite Index fell 2.1 percent today, Hong Kong’s Hang Seng Index slid 0.8 percent, while the Hang Seng China Enterprises Index of mainland shares extended last week’s 3.6 percent decline that was the most since October. Data last week showed official gauges of China’s manufacturing and services industries fell in December to four-month lows.

China’s services purchasing managers’ index fell to 50.9 in December from 52.5 in November, according to a report released today by the HSBC Holdings Plc and Markit Economics. President Xi Jinping is rolling out the biggest economic reforms since at least the 1990s to support a transition from export-led growth to domestic consumption.

Repo Rate

China’s one-year interest-rate swaps declined by the most in almost two weeks after the People’s Bank of China said it will keep “moderate liquidity” in the financial system. One-year interest-rate swaps, the fixed payment needed to receive the floating seven-day repo rate, fell eight basis points to 5.23 percent as of 10:58 a.m. in Shanghai, according to data compiled by Bloomberg. They touched a record high of 5.38 percent on January 2.

S&P futures signaled the gauge may extend last week’s decline. Services and factory data today that may strengthen the case for the Fed to end its asset-purchase programme this year. Headwinds for the US economy may be abating, outgoing Fed Chair Ben S. Bernanke said January 3.

Former US Treasury Secretary Lawrence Summers, John Taylor of Stanford University and Martin Feldstein, a professor at Harvard University, said the US economy is poised for faster growth this year.

South Korea’s won fell 0.6 percent to a one-week low of 1,061.6 per dollar as the Fed begins paring stimulus that has fueled demand for emerging-market assets. Indonesia’s rupiah lost 0.5 percent and the Thai baht slid 0.3 percent.

The yen advanced 0.5 percent to 104.3 per dollar after touching a five-year low of 105.44 January 2. Japan’s currency gained 0.6 percent to 141.7 per euro. Europe’s common currency slid to a one-month low against the greenback.


Category: FinanceAsia

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