Asian stocks fell, with the regional benchmark index dropping from a six-year high, as investors weighed valuations after U.S. equities slid.
Nintendo Co. (7974) lost 1.5 percent, pacing declines among Japanese exporters as the yen traded near a two-week high ahead of the Bank of Japan’s policy decision tomorrow. Takata Corp. decreased 2.1 percent in Tokyo, extending yesterday’s rout, after saying further fixes may be needed for its vehicle airbags. Fortescue Metals Group Ltd. (FMG), Australia’s third-biggest iron-ore producer, fell 4.6 percent after Morgan Stanley downgraded its rating on the stock.
The MSCI Asia Pacific Index (MXAP) dropped 0.3 percent to 144.18 as of 7:02 p.m. in Hong Kong, with all but three of its 10 industry groups falling. The measure rebounded 11 percent to a six-year high through yesterday from this year’s low in February amid signs China’s economy is stabilizing and the U.S. recovery is intact. Shares on the gauge traded at 13.24 times estimated earnings today, compared with a multiple of 16.45 for the Standard & Poor’s 500 Index.
“We’re going to see a bit of a downside following a slide in U.S. equities,” Chris Weston, chief market strategist at IG Ltd. in Melbourne, said by phone. “A pullback in developed markets would be very positive as it will help bring fresh money in. Unless we see the fundamental picture dramatically changed, we are unlikely to see a huge correction.”
Japan’s Topix index lost 0.1 percent. The nation’s currency held gains amid speculation the BOJ will refrain from expanding stimulus at a meeting that starts today, after the European Central Bank introduced negative rates last week. The yen was little changed at 102.07 per dollar today after advancing 0.3 percent yesterday.
Japanese exporters declined. Nintendo, the maker of Wii game consoles, dropped 1.5 percent to 11,515 yen. Fanuc Corp. (6954), a maker of industrial robots that gets about 65 percent of sales outside of Japan, fell 2.2 percent to 17,325 yen.
BOJ officials are considering maintaining a large balance sheet even after it achieves its inflation target, reducing the risk of a surge in long-term bond yields, according to people familiar with the discussions.
South Korea’s Kospi index declined 0.2 percent after the nation’s central bank left its key interest rate unchanged. Taiwan’s Taiex index retreated 0.3 percent. Hong Kong’s Hang Seng Index slipped 0.4 percent, while China’s Shanghai Composite Index lost 0.2 percent. Singapore’s Straits Times Index added 0.1 percent. India’s Sensex Index advanced 0.4 percent and Thailand’s SET Index slipped 0.5 percent.
After equity markets closed in Hong Kong and China, data showed new local-currency loans in China last month rose to 870.8 billion yuan ($140 billion). That topped the 750 billion yuan median estimate of 43 economists surveyed by Bloomberg. The broadest measure of new credit was 1.4 trillion yuan, matching analysts’ estimates.
Australia’s S&P/ASX 200 Index dropped 0.5 percent after employment unexpectedly declined in May. New Zealand’s NZX 50 Index (NZSE50FG) added 0.3 percent after the Reserve Bank raised interest rates for the third time this year and signaled more tightening to come.
Futures on the S&P 500 added less than 0.1 percent today. The U.S. equity benchmark index fell 0.4 percent yesterday, the biggest decline since May 20, after the World Bank cut its forecast for global economic growth and as Boeing Co. sank.
Investors are also considering the long-range market repercussions after U.S. House Majority Leader Eric Cantor lost to a Tea Party-backed candidate in yesterday’s primary in Virginia, fueling concern that gridlock will intensify in Washington. The seven-term House veteran was an ally for Wall Street on issues ranging from the 2008 Troubled Asset Relief Program to defending the Export-Import Bank.
Takata dropped for a second day, losing 2.1 percent to 2,107 yen in Tokyo. The U.S. Transportation Department launched an investigation after the company, whose airbags led to the recall of more than 3 million vehicles last year, told customers that defective components may need to be fixed again.
Fortescue declined 4.6 percent to A$4.33 in Sydney. Morgan Stanley downgraded its rating on the stock to underweight from overweight and cut its share-price forecast by 48 percent to A$4.
Xinyi Glass Holdings Ltd. (868) dropped 7.8 percent to HK$4.73 in Hong Kong after the supplier of glass to the automotive and construction industries said it expects first-half profit will fall.
Among shares that advanced, China Huishan Dairy Holdings Co Ltd. rose 2.1 percent to HK$1.93 after the milk producer reported full-year profit increased to 1.25 billion yuan ($201 million) from 945.4 million yuan a year earlier.
Mitsubishi Heavy Industries Ltd. added 1.3 percent to 649 yen in Tokyo. The heavy-machinery maker and Siemens AG are said to be in talks about a joint bid to buy Alstom SA’s energy business and counter a $17 billion offer by General Electric Co.
To contact the editors responsible for this story: Sarah McDonald at email@example.com John McCluskey