Oct. 10 (Bloomberg) --
"Asian stocks fell for a third day, credit risk in the region rose to a one-week high and oil declined as slowing Chinese growth and Europe’s debt crisis hurt corporate profits. The won retreated from an 11-month high.
The MSCI Asia Pacific Index slipped 0.8 percent at 12:11 p.m. in Tokyo, led by Japanese shares. Futures on the Standard & Poor’s 500 Index lost 0.2 percent. Bond risk in the Asia-Pacific region rose to the highest level in at least a week. South Korea’s won weakened 0.4 percent to 1,114.80 per dollar. Commodities as measured by the S&P GSCI Index decreased 0.3 percent as oil fell 0.5 percent. Markets in Taiwan are closed.
Alcoa Inc. said slowing Chinese growth will cut global demand for aluminum, while Japanese car sales in China plunged on a territorial dispute. Data today may show French and Italian industrial production fell in August as Europe’s debt crisis hampers growth. Spain’s Prime Minister Mariano Rajoy is struggling to contain the country’s deficit as he meets with French President Francois Hollande in Paris today.
“We are clearly seeing the impact of a Chinese slowdown globally and it’s indicated in Alcoa’s numbers,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages almost $100 billion. “Equity markets have had a very strong run. So, it won’t be surprising if they go through some correction.”
More than three stocks fell for every one that climbed on the MSCI Asia Pacific Index. Japan’s Nikkei 225 Stock Average and the broader Topix Index slumped at least 1.4 percent. Toyota Motor Corp. sank 1.8 percent after reporting the biggest drop in China sales since at least 2008. Data today may show Chinese passenger-vehicle sales rose at the slowest pace in eight months.
Alcoa, S&P
The Shanghai Composite Index dropped 0.3 percent, led by materials producers, and Hong Kong’s Hang Seng Index slipped 0.5 percent. Aluminum Corp. of China Ltd., the nation’s biggest producer, declined at least 0.6 percent in Hong Kong and Shanghai. Alcoa, the first company in the Dow Jones Industrial Average to report results, posted earnings and sales that beat analysts’ estimates.
Third-quarter profits and sales for the S&P 500 probably fell in unison for the first time in three years, according to analysts’ estimates compiled by Bloomberg. Five years after the S&P 500 began its decline from a record, per-share earnings may have dropped 1.7 percent on average after they were little changed in the second quarter. Sales may have slipped 0.6 percent, the data show.
The cost of insuring Asia-Pacific corporate and sovereign bonds from default increased, according to traders of credit- default swaps. The Markit iTraxx Asia index of 40 investment- grade borrowers outside Japan added 3.5 basis points to 134, Credit Agricole SA prices show. The gauge is set for its highest close since Oct. 2, according to data provider CMA.
Yuan, Won
China’s yuan weakened for a third day, the longest run of declines since August, on heightened concern the economy is losing momentum. The country’s money-market rate dropped for a second day on speculation cash supply will increase as the central bank adds funds to the financial system. The People’s Bank of China injected a total of 265 billion yuan ($42 billion) via reverse repos yesterday, the second-biggest amount for a single day since Bloomberg started compiling the data in 2004.
The won, which touched 1,109.57 on Oct. 8, the strongest level since Nov. 1, 2011, retreated as 13 out of 16 economists in a Bloomberg survey forecast interest rates will be cut at a central bank policy meeting tomorrow.
The peso fell 0.2 percent as data today showed Philippine exports declined in August for the first time in five months. Malaysia’s ringgit weakened 0.2 percent before a report tomorrow that economists predict will show industrial output fell for the first time in a year.
Euro Weakens
The euro weakened against most of its major counterparts, losing 0.3 percent against the dollar and yen. German Chancellor Angela Merkel urged Greece yesterday to maintain austerity while reiterating her desire to keep the country in the euro. Spain’s economy minister Luis de Guindos said the nation will decide on the “sensitive” issue of a full bailout, taking into account the impact for the whole euro area.
The euro was at $1.2845, after earlier touching $1.2836 the lowest since Oct. 1. The common currency declined to 100.44 yen, also the least since Oct. 1, before trading at 100.53. The Dollar Index, a gauge against six major peers, rose 0.2 percent.
Crude in New York declined to $91.91 a barrel after climbing to the highest close in a week yesterday on increased tension in the Middle East. Brent oil slipped 0.5 percent to $113.98 a barrel. The spread between the two contracts reached $22.49 on Oct. 8, the widest since October 2011.
London-traded Brent prices are “still high” and Saudi Arabia will work toward “moderating” them, Oil Minister Ali al-Naimi said yesterday. U.S. crude inventories probably rose by 1.5 million barrels last week, according to a Bloomberg survey before an Energy Department report tomorrow.
Aluminum for three-month delivery on the London Metal Exchange decreased 0.5 percent to $2,043 a metric ton. Alcoa, the largest U.S. aluminum producer, said global demand for the metal will climb by 6 percent this year, paring a July projection of 7 percent.
To contact the reporters on this story: Glenys Sim in Singapore at gsim4@bloomberg.net ; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net "
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Website: www.stevenmorris.co.za
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