Asian stocks fell, with the regional benchmark index posting its biggest drop since June 20, as Japanese shares led declines across the region after the yen gained for a fourth day and metals prices slid.
Pioneer Corp. (6773) sank 8.7 percent in Tokyo after the maker of car stereos lowered its full-year profit forecast. BHP Billiton Ltd., the world’s biggest mining company, dropped 2 percent in Sydney as copper futures declined. The MSCI Asia Pacific Index decreased 2 percent to 133.01 at 10:03 p.m. in Tokyo as more than five shares dropped for every one that climbed.
Japan’s Nikkei 225 Stock Average tumbled the most in almost two months at the close in Tokyo as the yen touched a six-week high against the dollar. The U.S. trade deficit narrowed more than forecast in June, the Commerce Department said yesterday, driving the Standard & Poor’s 500 Index lower as investors weighed whether the stronger data would encourage the Fed to start reducing its monthly bond purchases.
“Markets are entering a period of uncertainty,” said Yoji Takeda, Hong Kong-based head of Asian equities at RBC Investment (Asia) Ltd., which oversees $1.5 billion. “There’s a policy vacuum in Japan and the government isn’t going to come up with new policies until parliament resumes sessions in September. While the possible tapering of U.S. stimulus has been more or less priced in, people tend to be a little bit cautious until it happens.”
The Bank of Japan will maintain its asset-purchasing program at a two-day meeting that started today, according to all 26 economists surveyed by Bloomberg.
Japan’s Topix index dropped 3.2 percent. South Korea’s Kospi index and Taiwan’s Taiex index both slipped 1.5 percent. Australia’s S&P/ASX 200 Index fell 1.9 percent, its biggest decline since July 3. New Zealand’s NZX 50 Index lost 0.6 percent.
Hong Kong’s Hang Seng Index decreased 1.5 percent. The city’s benchmark gauge has fallen 4.7 percent this year, the biggest decline among 24 developed markets tracked by Bloomberg. China’s Shanghai Composite Index slipped 0.7 percent, while Singapore’s Straits Times Index gained 0.2 percent.
The MSCI Asia Pacific Index advanced 1.3 percent last month, its first such gain since April, after China pledged to do more to support a transition from an export-based economy to domestic demand.
Fed Bank of Chicago President Charles Evans, who has been among the strongest proponents of record monetary easing, said yesterday he “would clearly not rule” out a decision to begin dialing back bond purchases in September. Economists at Goldman Sachs Group Inc. and Barclays Plc raised their estimates for second-quarter U.S. gross domestic product, citing the trade data.
German factory orders increased by the most in eight months and U.K. industrial production beat forecasts in June, adding to evidence of a nascent recovery in Europe, separate reports showed yesterday. Italy’s economic contraction slowed.
Pioneer dropped 8.7 percent to 178 yen in Tokyo after cutting its full-year net-income forecast by 92 percent as profit margins dropped and sales of car-navigation systems and optical disc-drives declined. IHI Corp. (7013), a manufacturer of jet engines and ships, dropped 5.8 percent to 409 yen after its earnings outlook missed estimates.
Japanese exporters declined as the yen traded as high as 96.77 per dollar. A stronger currency reduces the overseas income of the nation’s carmakers and electronics manufacturers when repatriated.
Toyota Motor Corp., Asia’s biggest carmaker, dropped 2.4 percent to 6,230 yen. Canon Inc. (7751), the largest camera maker, slipped 2.5 percent to 3,130 yen. Sony Corp., which manufactures Bravia televisions and PlayStation game consoles, fell 4.3 percent to 1,952 yen.
Hyundai Motor Co., South Korea’s largest carmaker, decreased 3.2 percent to 225,000 won, while affiliate Kia Motors Corp. fell 3.7 percent to 60,500 won after union negotiators walked out of wage talks and said they would ask workers to vote on a strike.
Raw-material producers dropped as copper futures fell. BHP Billiton slipped 2 percent to A$34.90 in Sydney. Rio Tinto Group, the world’s second-largest mining company, decreased 2.1 percent to A$58.60.
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