Asian Stocks Fall as U.S. Data, Commodity Prices Signal Recovery Weakening

Asian stocks fell this week, with the regional benchmark index falling by the most in six weeks, as U.S. economic data and plunging commodity prices added to signs the recovery in the global economy is weakening.

Toyota Motor Corp., the world’s largest carmaker, fell 0.6 percent in Tokyo. In Sydney, James Hardie Industries SE (JHX), the largest seller of home siding in the U.S., declined 4.9 percent while Billabong International Ltd., the world’s biggest surfwear maker, dropped 1.8 percent. Jiangxi Copper Co., China’s biggest producer of the metal, dropped 8.5 percent in Hong Kong. Inpex Corp., Japan’s No.1 oil and gas explorer, tumbled 8.6 percent.

“Fears of the U.S. economy grew,” said Peter Elston, a strategist at Aberdeen Asset Management Plc, which oversees about $282 billion. “I haven’t been convinced by these recoveries in the developed world as I just see them being driven by stimulus and the major structural trend is one of deleveraging.”

The MSCI Asia Pacific Index lost 1.4 percent to 137.57 this week. The gauge gained 0.5 percent the previous week after the Federal Reserve renewed its pledge to stimulate growth in the world’s biggest economy with low interest rates, boosting the outlook for the region’s exporters.

Australia’s S&P/ASX 200 Index declined 1.7 percent this week, while Singapore’s Straits Times Index lost 2.5 percent. Hong Kong’s Hang Seng Index (HSI), which completed its longest streak of daily losses since 2003 this week, dropped 2.4 percent. China’s Shanghai Composite Index slipped 1.6 percent. Japan’s Nikkei 225 Stock Average climbed 0.1 percent.

Holiday-Shortened Week

Markets in China, Hong Kong, Malaysia, Singapore, Sri Lanka, Taiwan, Thailand and Vietnam were closed on May 2 for a holiday. Vietnam was also closed the following day. Japan’s stock market was closed from May 3 through May 5. South Korea and Thailand’s stock market also closed on May 5.

The Standard & Poor’s 500 Index lost 1.7 percent this week in New York.

In Tokyo, Toyota slipped 0.6 percent to 3,210 yen in Tokyo, while Honda Motor Co., which receives 84 percent of its revenue overseas, dropped 3.6 percent to 3,075 yen. In Sydney, James Hardie, which counts the U.S. as its biggest market, lost 4.9 percent to A$5.61. Billabong, which receives nearly half of its revenue from the Americas, slumped 1.8 percent to A$6.63.

U.S. Growth Slows

Service industries in the U.S. expanded in April at the slowest pace in eight months as companies cut back in response to higher energy costs, according to the Institute for Supply Management’s index of U.S. non-manufacturing companies published on May 4.

Applications for jobless benefits unexpectedly jumped by 43,000 to 474,000 in the week ended April 30, the most since August, Labor Department figures showed on May 5.

Also, U.S. consumer confidence dropped last week to the lowest level in more than a month as rising fuel costs squeezed American household budgets. The Bloomberg Consumer Comfort Index decreased to minus 46.2 in the week ended May 1, the lowest level since the end of March, from minus 45.1 the prior period.

“The U.S. economic data looks to have lost significant momentum in the most recent month, and this is weighing on markets,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion.

Commodity stocks fell the most this week after crude oil and metal prices declined on concern that economic growth will slow as central banks seek to cool inflation by raising borrowing costs. A gauge of energy stocks and material shares declined the most among the 10 industry groups on the MSCI Asia Pacific Index this week.

Commodities Producers

BHP Billiton Ltd., the world’s largest miner, dropped 2.7 percent to A$44.58 in Sydney, the biggest drag on Australia’s S&P/ASX 200 Index this week, while Inpex tumbled 8.6 percent to 563,000 yen in Tokyo, the biggest drop on the Nikkei 225 (NKY) this week. Cnooc Ltd., China’s biggest offshore oil producer, slipped 6.2 percent to HK$17.98 in Hong Kong.

Jiangxi Copper fell 98.5 percent in Hong Kong. Newcrest Mining Ltd., Australia’s biggest gold producer, slid 5 percent to A$39.38.

Crude oil for June delivery plunged 8.6 percent to $99.80 a barrel on May 5, the lowest settlement in New York since March 16 and the biggest percentage drop since April 20, 2009.

The London Metal Exchange Index of six metals including copper and aluminum sank 5.9 percent this week, its second straight week of declines. Gold may decline as some investors sell after the metal’s rally to a record and as other commodities drop, according to a survey of 18 traders, investors and analysts compiled by Bloomberg.

“Commodities are overbought and over-owned,” said Diane Lin, a fund manager at Pengana Capital, which oversees $1 billion in Sydney. “We’re seeing a correction on that. We don’t think it’s something that will give structural growth.”

To contact the reporter on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.

• Facebook Share
• LinkedIn
• Google +1
• COMMENTS
• Print
• QUEUE