Most Asian Stocks Drop on Bernanke, Japan Stimulus; Pound Falls
Dec. 8 (Bloomberg) -- Most Asian stocks fell after FederalReserve Chairman Ben S. Bernanke said the U.S. economy faces“formidable headwinds,” and Japan unveiled an $81 billionstimulus program. The U.K. pound weakened.
The Nikkei 225 dropped 0.27 percent at 4:15 p.m. Tokyo timeand the MSCI Asia Pacific Index gained 0.09 percent to 120.69.The pound fell 0.44 percent against the dollar at 7:15 a.m.London time after Moody’s Investors Service said the U.S. andU.K. has “resilient” AAA ratings. Futures on the Dow Jones EuroStoxx 50 fell 0.10 percent.
While Bernanke said yesterday that the U.S. recovery wouldbe restrained by a weak labor market and tight credit, Asianreports showed the region continues to emerge from the firstglobal recession since World War II. Australian businessconfidence climbed to the highest level in more than seven years.Taiwan’s exports leapt 19.4 percent and Japan’s current-accountsurplus soared 43 percent from a year earlier.
“Generally, Bernanke was dovish,” said Gerrard Katz, headof currency trading at Standard Chartered Plc in Hong Kong. “Ifthe data from the U.S. continues to improve, it’s going to begood for exports and I’d expect further pressure on the dollaragainst Asian currencies.”
U.S. index futures rose with the Standard & Poor’s 500Index futures 0.5 percent higher. The S&P 500 erased gainsyesterday as investors speculated the economy isn’t growing fastenough to shield banks from further losses.
“The economy confronts some formidable headwinds that seemlikely to keep the pace of expansion moderate,” Bernanke saidin a speech to the Economic Club of Washington.
Stocks Lower
About five stocks declined for every three that rose in theMSCI Asia index. Shipping lines declined the most among the 33industry groups in the Topix after the Baltic Dry Index, abenchmark for commodity cargo rates, dropped for the first timein four days yesterday in London.
Nippon Yusen K.K. lost 6 percent to 266 yen, whileKawasaki Kisen Kaisha Ltd. retreated 5.4 percent to 264 yen, thetwo biggest declines in the Nikkei 225. Mitsui O.S.K. Lines Ltd.,the operator of the world’s largest merchant fleet, slipped 4.1percent to 494 yen.
China’s Shanghai Composite Index declined 1.3 percent, themost since Nov. 27. China Shenhua Energy Co. and Zijin MiningGroup Co., the nation’s biggest producers of coal and gold,retreated more than 1 percent. Jiangxi Copper Co., China’sbiggest producer of the metal, sank 1.5 percent in Shanghai.
“Commodity stocks need a break now as the pick-up indemand amid the economic recovery has already been priced in,”said Chen Wenzhao, a strategist at China Merchants Securities Co.in Shanghai.
Yen Stronger, Pound Falls
The yen rose for a second day against the euro, climbing to132.15 in Tokyo from 132.71 yesterday in New York and to 89.08per dollar from 89.51.
The pound weakened after Moody’s Investors Service saidtoday the U.S. and U.K. had “resilient” AAA ratings, asopposed to the “resistant” top ratings on Canada, Germany andFrance which were less impacted by the financial crisis.
Public finances in “resilient” AAA rated countries are“deteriorating considerably and may therefore test the AAAboundaries,” Moody’s said in a report today. None of the top-rated countries were “vulnerable,” or had public finances thatwere “stretched beyond the point of ‘no return’ to the AAAcategory,” according to the report.
Japan Stimulus
Japan’s 7.2 trillion yen spending plan includes 3.5trillion yen ($39.3 billion) to help regional economies, 600billion for employment and 800 billion for environmentalprojects. The government is battling falling prices and thesurging yen, which strengthened 17 percent from its low in March.
Asian bonds rallied. The yield on South Korea’s 5 percentnote due September 2014 fell five basis points to 4.71 percent,according to Korea Stock Exchange. The yield on the Philippinegovernment’s 10-year bond fell 10 basis points to 7.65 percent.
Taiwan’s exports jumped from a year earlier last month,compared with a 4.7 percent decline in October, the Ministry ofFinance said in Taipei late yesterday. Japan’s current-accountsurplus rose to 1.4 trillion yen in October as a decline inexports eased, the Ministry of Finance said in Tokyo today.
A business sentiment index in Australia climbed 3 pointsto 19, the most since May 2002, according to a NationalAustralia Bank Ltd. survey of more than 540 companies questionedbetween Nov. 23 and Nov. 27, and released in Sydney today. Afigure above zero shows optimists outnumber pessimists.
Recovery Under Way
“We still remain confident that the recovery’s underway,” said Matt Riordan, who helps manage $5.1 billion atParadice Investment Management in Sydney. “The companies we’retalking to are seeing signs of things improving. The bigquestion from where we sit now is the speed by which ithappens.”
Commodities from gold and copper to corn gained as theDollar Index that measures the currency against six majortrading partners fell 0.1 percent, dropping for a second day.Gold increased for the first time in four days, rising 0.7percent to $1,166.70 an ounce. That was still down 4.9 percentfrom its record $1,226.56 an ounce on Dec. 3.
Copper, used in homes and cars, increased 0.7 percent to$7,047 a metric ton on the London Metal Exchange. Corn was up 1percent at $3.8750 a bushel.
Crude oil rose for the first time in five days, gaining asmuch as 0.6 percent to $74.39 a barrel in New York as the dollarweakened and some investors took the view a decline below $75made it an attractive investment.
Oil recouped some of yesterday’s 2 percent loss, madeafter Bernanke’s comments on the pace of the U.S. economicrecovery raised concern fuel demand won’t recover rapidly in theworld’s largest energy user.
“Markets had for a while started to get used to the $75to $80 a barrel range for oil, and the move to the lower part ofthat range is probably attracting some buying,” David Moore, acommodity strategist at Commonwealth Bank of Australia Ltd. inSydney, said by telephone.
To contact the reporters on this story:Bob Chen in Hong Kong at bchen45@bloomberg.netShani Raja in Sydney at Sraja4@bloomberg.net;
Last Updated: December 8, 2009 02:18 ESTSource: Bloomberg
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