Japanese Stocks Fall; Australian Bond Yields Decline

Japanese stocks fell the most in two weeks as companies predicted lower-than-estimated profits. The Australian dollar fell and the nation’s 10-year bond yield slid to a record low ahead of a forecast interest-rate cut today.

The Nikkei 225 Stock Average (NKY) slumped 1.2 percent as of 12:50 p.m. in Tokyo, extending the first monthly drop since November. Australia’s S&P/ASX 200 Index added 0.7 percent and Standard & Poor’s 500 Index futures climbed 0.1 percent. The nation’s 10-year bond yields declined as much as six basis points to 3.612 percent, while the currency weakened 0.3 percent to $1.0400. Copper retreated 0.3 percent.

For the first time since the start of 2008, bonds were the only investments to provide positive returns last month amid renewed concern the global economy is slowing. The Reserve Bank of Australia will cut its key rate to 4 percent from 4.25 percent, according to economists in a Bloomberg News survey. China’s manufacturing grew for a fifth month in April, hurting the case for policy makers to ease monetary policy.

“Investors can’t get optimistic about the Japanese economy,” said Koji Toda, chief fund manager at Resona Bank Ltd. in Tokyo. “The number of companies where earnings are improving as much as investors’ expectations is relatively small.”

Earnings Season

China, Hong Kong, India, South Korea and Singapore were among markets closed today for a holiday. The MSCI Asia Pacific Index slid for a second month in April, losing 1 percent.

Tokyo Electron Ltd., which produces semiconductor manufacturing equipment, sank 9 percent for the biggest drop in the Nikkei 225 after its earnings estimate trailed analysts’ projections. Sharp Corp. (6753), Japan’s biggest maker of liquid- crystal displays, tumbled 8.7 percent after the company forecast a wider-than-estimated annual loss.

Fixed-income assets -- from Australian government debt to U.S. Treasuries to global junk bonds -- gained 0.57 percent last month through April 27 including reinvested interest, according to Bank of America Merrill Lynch index data. The MSCI All- Country World Index of stocks lost 1.1 percent including dividends while the Standard & Poor’s GSCI Total Return Index of metals, fuels and agricultural products fell 0.5 percent. The U.S. Dollar Index (DXY) dropped 0.29 percent.

The Australian dollar weakened against all of its 16 major counterparts. The nation’s five-year rates slid as low as 3.06 percent, six basis points less than yesterday’s close.

“There’s still a downside risk for the Australian dollar, given there’s uncertainty around Europe and weaker data globally,” said Greg Gibbs, a Sydney-based currency strategist at Royal Bank of Scotland Group Plc.

Manufacturing Data

China’s Purchasing Managers’ Index rose to 53.3 from 53.1 in March, the nation’s statistics bureau and logistics federation said in a statement today. The median forecast by economists in a Bloomberg survey was for a reading of 53.6. Results above 50 indicate expansion.

Investors will also get data on U.S. factories today. The Institute for Supply Management Inc.’s manufacturing gauge fell to 53 this month from 53.4 in March, according to the Bloomberg survey median ahead of the data today. Pfizer Inc., Archer Daniels Midland Co. and Legg Mason Inc. are among S&P 500 companies scheduled to report earnings.

Brent oil for June settlement retreated 0.1 percent to $119.33 a barrel on the London-based ICE Futures Europe exchange. Oil in New York traded near the lowest close in two days before a government report that may show crude inventories rose to a 21-year high in the U.S., the world’s biggest consumer of the commodity.

To contact the reporters on this story: Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net; Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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