Asian stocks fell, extending three weeks of losses, Standard & Poor’s 500 Index futures declined and the yen and dollar gained as U.S. lawmakers approached an impasse on budget cuts, Singapore said economic growth may slow and Spain replaced its government.
The MSCI Asia Pacific Index sank 1.1 percent at 11:01 a.m. in Tokyo, set for its first five-day slump since August. S&P 500 futures declined 0.9 percent and Treasuries advanced. The yen strengthened against all of its 16 major peers, while the dollar traded at $1.3526 per euro and Malaysia’s ringgit lost 0.3 percent. The Markit iTraxx Asia index of debt-default risk headed for its highest close in almost six weeks. Copper retreated 0.7 percent.
The U.S.’s deficit-cutting congressional supercommittee is expected to announce today it has failed to reach agreement on at least $1.2 trillion in federal budget savings, a Democratic aide said. Japan’s exports fell the first time in three months and Singapore said growth will probably slow from 5 percent this year. Spain’s Mariano Rajoy told the country to brace for difficult times after the debt crisis helped sweep his People’s Party to the biggest parliamentary majority in almost 30 years.
“There’s likely to be a continuing impasse and people will focus on the stability of the U.S. politically,” said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “People will probably sit on the sideline and wait for clarity.”
About three shares declined for every two that gained on MSCI’s Asia Pacific Index, which was set for its lowest close since Oct. 7. Japan’s Nikkei 225 Stock Average retreated 0.3 percent, South Korea’s Kospi index slumped 1.3 percent and Taiwan’s Taiex index lost 1.7 percent.
Japanese Exporters
Honda Motor Co. and Toyota Motor Corp. dropped more than 2 percent each in Tokyo, leading losses among Japanese exporters after the Ministry of Finance said today shipments declined 3.7 percent in October from a year earlier.
Futures expiring in December signal the S&P 500 may extend last week’s 3.8 percent slump. Today is the deadline for the Congressional Budget Office to receive a plan that it can analyze before the committee’s Nov. 23 target date for reaching an agreement.
The Congressional panel has been deadlocked over taxes, with Democrats seeking increases on high earners while Republicans were pushing for an extension of cuts enacted under President George W. Bush. Another sticking point has been the Republicans’ call for cuts, over Democrats’ opposition, in entitlement programs such as Medicare.
Treasuries, Dollar
Treasury 10-year yields decreased three basis points to 1.98 percent. The Treasury Department is scheduled to sell $35 billion of two-year notes today, the first of three auctions of coupon-bearing debt this week totaling $99 billion.
The dollar traded at 76.83 yen from 76.91 in New York on Nov. 18. Treasuries and the dollar have gained even after Standard & Poor’s cut U.S.’s AAA credit rating on Aug. 5 for the first time, saying the government has become “less stable, less effective and less predictable.”
“The policy in the U.S. is as bad as the policy in Europe,” said Roger Bridges, who oversees the equivalent of $15 billion of debt as the Sydney-based head of fixed income at Tyndall Investment Management Ltd., a unit of Japan’s Nikko Asset Management Co. “Investors will be attracted in a flight to quality,” to U.S. government debt.
The euro weakened against the yen even after Rajoy’s People’s Party won 186 of the 350 seats in Spain’s parliament, compared with 110 seats for the Socialist Party’s candidate Alfredo Perez Rubalcaba. Rajoy, who said on Nov. 18 he hoped Spain wouldn’t need a bailout before his new government takes over in a month’s time, has pledged to cut the budget deficit and regain the nation’s AAA credit rating.
Singapore’s Exports
Malaysia’s ringgit lost 0.3 percent to 3.1725 per dollar after neighboring Singapore forecast economic growth of 1 percent to 3 percent in 2012. Non-oil domestic exports will probably rise 2 percent to 3 percent in 2011, lower than a previous forecast for shipments to expand 6 percent to 7 percent, Singapore’s trade promotion agency said in a separate statement today.
The cost of insuring Asia-Pacific corporate and sovereign bonds against non-payment increased, with the Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan climbing seven basis points to 215.5 basis points, BNP Paribas SA prices show. The gauge is set for its highest close since Oct. 11, according to data provider CMA.
The Markit iTraxx Australia index advanced four basis points to 201, Westpac Banking Corp. prices show, while the Markit iTraxx Japan index rose two basis points to 194 basis points, according to Deutsche Bank AG price.
Oil for January delivery slid to $97.06 a barrel in New York before trading at $97.65. Three-month copper sank 0.7 percent to $7,471.25 a metric ton in London, also poised for a third day of declines. Zinc tumbled 1.7 percent, while lead retreated 1.1 percent.
(source: Bloomberg)
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21/11/2011 09:59:11 AM | 