Asia Stocks Pare Drop With Aussie as Data Spur China Policy Bets
Asian stocks outside Japan pared losses, while higher-yielding currencies got a boost after Chinese factory-gate prices equaled their biggest slump since the global financial crisis, underscoring the threat that weakness in the world’s second-largest economy poses to efforts to fight deflation.
The MSCI Asia Pacific Index excluding Japan Index trimmed its retreat as Chinese shares fluctuated amid stimulus speculation. Japanese equities fell as the yen gained for a third day amid haven demand. Copper and nickel fluctuated as U.S. crude oil rose toward $47 a barrel. The currencies of New Zealand and Canada advanced, and the Australian dollar pared losses after the weak China price data highlighted the need for governments to do more to shore up growth.
“The cautionary element in the market is likely to continue,” Chris Green, an Auckland-based strategist at First NZ Capital Ltd., said by phone. “In terms of global growth, the risk is skewed towards the downside. A softer read on the Chinese inflation data reinforces the backdrop of deflationary pressures and softer growth profile globally. The Chinese economy is probably the largest risk that the global economy faces at this point.”
China’s consumer inflation came in below estimates and factory gate deflation extended a record stretch of declines, signaling the People’s Bank of China still has room to ease monetary policy further to support a slowing economy. The data follows a report Tuesday that showed a collapse in imports to the world’s No. 2 economy that’s transmitting the slowdown to other economies. JPMorgan Chase & Co., the first of the big U.S. banks to report earnings, posted below-estimate profit and a drop in revenue late on Tuesday.
The Asia-Pacific gauge that doesn’t include Japanese shares trimmed its loss to 0.4 percent after dropping as much as 0.9 percent as the price data were released. The Hang Seng China Enterprises Index fluctuated after erasing a drop of 1.3 percent in Hong Kong, while the Hang Seng Index retreated 0.4 percent. The Shanghai Composite Index edged higher as all industry groups advanced.
The MSCI Asia Pacific Index lost 1.2 percent, dragged lower by Japan’s Topix index, which retreated 2.3 percent to put it on track for its biggest one-day drop this month.
Australia’s S&P/ASX 200 Index slipped 0.1 percent, falling a third day, as the Kospi index in Seoul dropped 0.4 percent. New Zealand’s S&P/NZX 50 Index rose 0.3 percent in a fourth straight day of gains. Markets in Indonesia and Malaysia are closed for holidays Wednesday.
S&P 500 Index futures were little changed following a 0.7 percent drop in the U.S. benchmark, its second retreat in 11 days. FTSE 100 Index contracts slid 0.7 percent.
Canada’s dollar advanced 0.3 percent and the kiwi strengthened 0.6 percent. Norway’s krone increased 0.4 percent with South Africa’s rand, while the U.K. pound put on 0.2 percent.
The Bloomberg Dollar Spot Index, a gauge of the U.S. currency against 10 major peers, was little changed. The euro, which climbed 0.2 percent Tuesday, gained 0.1 percent to $1.1388.
The Australian dollar, normally seen as a bellwether for China, weakened to 72.37 U.S. cents after sinking 1.6 percent Tuesday, its steepest one-day drop since Aug. 24. Australian 10-year bond yields dropped five basis points.
Westpac Banking Corp., the nation’s second-biggest lender, announced an increase in home loan interest rates, a move that could drag on the economy and prompt the central bank to continue easing monetary policy, according to Shane Oliver, global strategist at AMP Capital Investors Ltd. in Sydney, which manages $112 billion.
The yen, which typically strengthens during bouts of risk aversion, climbed to 119.62 per dollar after gaining 0.4 percent the past two days.
Singapore’s dollar snapped a two-day drop, rising 0.3 percent after the monetary authority, the only advanced economy regulator to use the exchange rate as a key policy tool, said it would “slightly” reduce the pace of the currency’s appreciation versus those of its trading partners.