Asian shares slumped the most in two weeks and U.S. stock-index futures fell as commodities dropped and the dollar strengthened. Australia’s currency weakened after the nation’s inflation rate rose less than economists estimated.
The MSCI Asia Pacific Index fell 1.1 percent to 129.03 as of 3:17 p.m. in Tokyo. Futures for the Standard & Poor’s 500 Index retreated 0.4 percent and those for the Euro Stoxx 50 Index slid 0.3 percent. The so-called Aussie traded at 97.43 U.S. cents and the yen weakened to 81.77 against the dollar. The won fell the most in two weeks after a Bank of Korea official said imposing capital controls to slow fund inflows “may be useful.”
Oil dropped, snapping three days of gains, as investors sold futures contracts against a strengthening dollar and on speculation U.S. crude stockpiles climbed to the highest since June. BYD Co., the Chinese carmaker backed by Warren Buffett, plunged in Hong Kong trading after JPMorgan Chase & Co. cut its investment rating on the company, while Asciano Group sank the most in more than four months in Sydney after Australia’s largest port operator said coal shipments missed its estimates.
“In the short term, expect Asian markets to see a correction,” said Chris Leung, a Hong Kong-based portfolio manager at Taifook Asset Management Ltd., which oversees $400 million. “I’m a bit cautious at the moment.”
More than twice as many stocks declined as advanced in the MSCI Asia index. Hong Kong’s Hang Seng Index retreated 1.6 percent, South Korea’s Kospi Index decreased 0.5 percent and Australia’s S&P/ASX Index fell 0.9 percent. Most Asia-Pacific indexes reversed gains from this morning.
BYD decreased 8.6 percent after JPMorgan cut the carmaker to “underweight” from “neutral.” It had the steepest drop in the MSCI index, followed by Mitsui Chemicals Inc., which sank 6.7 percent in Tokyo after Goldman Sachs Group Inc. reduced its share-price estimate. Asciano Group lost 4.3 percent in Sydney. BHP Billiton Ltd., the world’s largest mining company and Australia’s biggest oil producer, decreased 0.8 percent.
Crude oil futures for December delivery fell as much as 30 cents to $82.25 a barrel on the New York Mercantile Exchange. Gold declined for the first time in four days, retreating 0.2 percent to $1,338.10 an ounce. Zinc snapped a five-day winning streak to decline by the most in three weeks.
Palladium for immediate delivery climbed as much as 1.3 percent to $637.75 an ounce, the highest level since 2001, and traded at $632.75 an ounce. Silver gained as much as 1.4 percent to $24.22 an ounce and traded at $23.9738 an ounce.
Australia’s dollar tumbled as government price data curbed expectations the central bank will need to increase interest rates to restrain inflation.
Australian Dollar, Inflation
The currency dropped 1.3 percent. It briefly reached parity on Oct. 15. The U.S. dollar reached as strong as $1.3810 per euro, the most since Oct. 20, before trading at $1.3813 from $1.3859 in New York yesterday.
Australian consumer prices rose 2.8 percent in the third quarter from a year earlier, after increasing at a 3.1 percent pace in the previous three months. The median estimate of 24 economists surveyed by Bloomberg News was for a 2.9 percent increase.
Swaps prices indicated a 16 percent chance that the Reserve Bank of Australia will boost borrowing costs next week from 47 percent yesterday, according to a Credit Suisse Group AG index.
“Any rate increase in Australia will be only gradual, even if the Reserve Bank of Australia were to resume the monetary tightening cycle next week,” said Akira Maekawa, a senior economist at online currency trading company Global Futures & Forex Ltd. in Tokyo. “Given such a benign rate outlook, the Aussie will struggle in extending its gains far above parity.”
U.S. Treasuries snapped a five-day decline after Federal Reserve Bank of New York President William Dudley said momentum in the economy has slowed.
“The Great Recession has been followed by a tepid recovery,” Dudley said yesterday in a speech in Rochester, New York. “Since 2009, economic activity has grown, but not robustly,” he said. “The momentum has slowed.”
Yields on benchmark 10-year notes fell two basis points to 2.63 percent in Tokyo, according to BGCantor Market Data. The yield may rise to between 3.10 percent and 3.20 percent by year’s end as further monetary easing by the Federal Reserve increases expectations for faster inflation, Citigroup Inc. said.
Longer-term bond yields are poised to rise from recent troughs, analysts led by New York-based Tom Fitzpatrick said in a note to clients, citing technical patterns and historical parallels.
South Korea’s won fell 1.3 percent to 1,130.94 per dollar and government bonds declined after the Bank of Korea reported slower-than-expected economic growth for the third quarter and said measures to mitigate capital flows can be “useful.”
Large inflows can cause excessive currency moves and asset-price bubbles, destabilizing the economy, Governor Kim Choong Soo said today in Seoul. Capital controls will only be considered “as a last resort,” Kim said. Record fund inflows are stoking appreciation in emerging-market currencies, hurting exporters and prompting countries from Brazil to Japan to China to try to limit gains.