Asian Commodity Stocks Decline on Concern U.S. Will Stall Global Recovery

Asian commodity stocks fell, dragging the regional index toward its first weekly drop in four weeks, after Standard & Poor’s said it may cut the U.S.’s credit rating and the Federal Reserve ruled out immediate further stimulus, driving down oil and metal prices yesterday.

BHP Billiton Ltd. (BHP), the world’s largest mining company, sank 1.6 percent in Sydney. Woodside Petroleum Ltd. (WPL), the nation’s second-biggest oil and gas producer, lost 2.2 percent. Mitsubishi Corp., Japan’s largest commodities trader, dropped 0.5 percent in Tokyo. Asustek Computer Inc. (2357) jumped 4.9 percent in Taipei after Nomura Holdings Inc. named the company one of its top picks among Asian technology stocks.

The MSCI Asia Pacific Index fell 0.01 point, or less than 0.1 percent, to 135.69 as of 7:39 p.m. in Tokyo. About five stocks rose for every four that fell. Last week, the gauge extended its rally for a third week as European leaders hammered out proposals to roll over debt to stop Greece defaulting, China’s latest interest-rate increase sparked speculation a tightening cycle may soon end, and a report showed U.S. retail sales rose.

“America still provides growth leadership and is the missing piece in the recovery story in many ways,” said James Holt, Sydney-based director of BlackRock Investment Management (Australia) Ltd., which oversees about $40 billion. “The default position is that a deal on the debt ceiling will be struck, but markets are getting jittery about the lack of progress. You either have a deal or you have a default, and one is hugely positive while the other is hugely negative.”

U.S. Stalemate

S&P said there was at least a 50 percent chance it will lower the U.S. AAA rating within 90 days, citing the risk of a stalemate enduring beyond any near-term agreement to raise the nation’s debt ceiling. Moody’s Investors Service put the U.S. credit rating on review July 13 for a downgrade. The U.S. has held the top rating since 1917.

Hong Kong’s Hang Seng Index dropped 0.3 percent, led by developers after China said it’s seeking to limit residential property prices in smaller cities. Australia’s S&P/ASX 200 Index fell 0.4 percent. Japan’s Nikkei 225 (NKY) Stock Average rose 0.4 percent. South Korea’s Kospi Index gained 0.7 percent.

Futures on the Standard & Poor’s 500 Index climbed 0.1 percent today. In New York, the index slipped 0.7 percent yesterday to the lowest level this month as a stalemate continued in Washington on negotiations over the U.S. debt ceiling.

Bernanke’s Mix Message

Fed Chairman Ben S. Bernanke, testifying for a second day before the Senate Banking Committee, told lawmakers yesterday: “We’re not prepared at this point to take further action.” A day earlier, he had said he was prepared to provide more stimulus if needed.

Even as the ratings companies warned of downgrades, U.S. Treasuries were still set for a weekly gain and three auctions this week attracted higher-than-average bidding as the worsening European debt crisis spurred investor demand for safer assets.

Ten-year Treasury yields were little changed at 2.96 percent, after falling to this year’s low of 2.81 percent earlier this week. The 10-year average is 4.06 percent.

BHP, also Australia’s No. 1 oil producer, sank 1.6 percent to A$42.89 in Sydney. Woodside fell 2.2 percent to A$39.17. Jiangxi Copper Co., China’s biggest producer of the metal by market value, slid 1.8 percent to HK$27.00 in Hong Kong. Mitsubishi Corp. (8058) dropped 0.5 percent to 2,049 yen in Tokyo. Inpex Corp. (1605), Japan’s largest energy exploration company, lost 1.5 percent to 588,000 yen.

Hong Kong Developers

Crude oil for August delivery dropped 2.4 percent to settle at $95.69 a barrel in New York yesterday. The London Metal Exchange Index of prices for six metals including copper and aluminum fell 1.8 percent.

Developers fell in Hong Kong after a summary of a State Council meeting chaired by Premier Wen Jiabao showed China will expand efforts to curb the growth in residential prices to smaller cities after limiting home purchases in Beijing and Shanghai.

China Overseas Land & Investment Ltd. (688), controlled by the nation’s construction ministry, sank 4.9 percent to HK$16.08, while China Resources Land Ltd. (1109), another state-controlled developer, dropped 2.9 percent to HK$14.68.

The MSCI Asia Pacific Index lost 1.5 percent this year through yesterday, compared with a gain of 4.1 percent by the S&P 500 and a drop of 2.9 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13.5 times estimated earnings on average, compared with 13.2 times for the S&P 500 and 10.7 times for the Stoxx 600.

Technology Stocks

Asustek climbed 4.9 percent to NT$280 in Taipei, leading technology stocks higher. Nomura said the company will likely be able to exceed its shipment target with a new tablet computer model, according to a report yesterday.

Other technology stocks rose after Google Inc. (GOOG), owner of the world’s largest Internet-search engine, reported sales and profit that topped analysts’ estimates.

MediaTek Inc., Taiwan’s largest chip designer, climbed 1.9 percent to NT$263. Lenovo Group Ltd., China’s biggest maker of personal computers, advanced 1 percent to HK$4.86 in Hong Kong.

Japanese electronics retailers advanced after the Nikkei newspaper reported that Japan may revive a program designed to promote sales of energy-efficient appliances to help cut power usage.

Yamada Denki Co. surged 2.4 percent to 6,880 yen. Bic Camera Inc. gained 3.1 percent to 49,250 yen.

Also in Tokyo, Hitachi Ltd., a maker of products from electronics to nuclear reactors, rose 1.9 percent to 484 yen after the company won preferential negotiating rights to join a Lithuanian nuclear plant project.

Mitsubishi Chemical Holdings Corp. (4188), a chemicals maker, gained 1.9 percent to 602 yen after the Nikkei said the company may report higher profit than previously forecast.

To contact the reporters on this story: Shani Raja in Sydney at sraja4@bloomberg.net.

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

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