Asian markets retreat most in a month on growth worries
Asian stocks fell the most in a month, European equity futures declined and Japanese bonds gained after Japan's machinery orders fell and Chinese Premier Wen Jiabao said the nation's economy faces “relatively large” downward pressure.
The MSCI Asia Pacific Index lost 1.5 per cent at 7:17 a.m. in London. Futures on the Euro Stoxx 50 Index dropped 0.2 per cent before a meeting by regional finance ministers in Brussels today. Contracts on the Standard & Poor's 500 Index slid 0.4 per cent.
Five-year Japanese bond yields sank to 0.19 per cent, the lowest since June 2003, while the 10-year yield touched a nine-year low set last month.
Data showed Japan's machinery orders fell 14.8 per cent in May from a month ago, the biggest drop since comparable figures were made available in 2005.
China's Wen said the government will intensify policy fine-tuning and “unswervingly” continue property controls, the official Xinhua News Agency reported yesterday, after the central bank announced on July 5 the second interest-rate cut in a month.
“The long-term growth issues remain,” said Masahiko Ejiri, a senior fund manager in Tokyo at Mizuho Asset Management Co., which oversees $US39 billion. “I'm negative on the macro- economic environment and I'm staying defensively positioned. There needs to be more stimulus from authorities to address slowing growth.”
European finance ministers gather today to discuss crisis- fighting measures adopted by heads of government at a summit last month including how to give support to Spanish banks. Besides cutting interest rates, China has also lowered banks' reserve-requirement ratios three times since November as the crisis in Europe, its largest export market, hurt growth.
China's consumer prices eased to a 29-month low in June, rising 2.2 per cent from a year earlier, giving the central bank room for further policy easing. The country's one-year interest- rate swap rate, the fixed cost needed to receive the floating seven-day repurchase rate, declined four basis points to 2.42 per cent, the lowest level since June 11, according to data compiled by Bloomberg.
About three stocks fell for each one that rose in the MSCI Asia Pacific Index. Samsung Electronics Co., the world's largest television maker, slid 3 per cent in Seoul, on concern the global slowdown will hurt sales. Australia's Iluka Resources Ltd., the world's biggest zircon producer, tumbled 24 per cent after cutting its sales forecast. China Yurun Food Group Ltd. slumped 9.3 per cent in Hong Kong after replacing its chief executive officer.
The S&P 500 lost 0.9 per cent on July 6 after US government data showed payrolls increased 80,000 last month, less than a 100,000 gain forecast in a Bloomberg survey. Alcoa Inc., the biggest US aluminum producer, is scheduled to unofficially start the second-quarter earnings season when it releases results after the close of trading today.
The jobs report is “a disappointing result but it fits in with the lead indicators which suggests that this next quarter is probably the quarter that we trough,” Timothy Riddell, head of global markets research at ANZ said in a Bloomberg Television interview today. “It's really from China and Europe that the greatest need for a push on the policy front is where we're looking. The meeting coming up is going to be important, we need to get some clarity about their policies.”
The euro weakened to $US1.2251 per dollar, the lowest level since July 2010, before trading at $US1.2295. At a summit in June, euro-region leaders agreed to relax conditions on emergency loans for Spanish banks.
The Markit iTraxx Asia index, which measures the cost of insuring bonds from default, rose 5 basis points to 172, Standard Chartered Plc prices show. The index is set for its highest close since June 28, according to CMA, which compiles prices quoted by dealers in the privately negotiated market.
Corn in Chicago climbed as much as 3.4 per cent to $US7.1625 a bushel, the highest price for the most-active contract since Sept. 15, and was last at $US7.13.
Prices have surged 41 per cent since June 15 as a drought withers crops in the US Midwest, the largest growing region. Wheat and soybeans also advanced.
Brent crude in London rose 0.6 per cent to $US98.75 a barrel after energy companies and labor unions in Norway, western Europe's largest crude exporter, failed to reach a compromise to prevent a strike from escalating.