Asia Stocks Fall as QE3 Speculation Fails to Ease Europe Concern

Asian Stocks Retreat for Third Day
Stocks of Toyota Motor Corp. fell. Photographer: Haruyoshi Yamaguchi/Bloomberg

Asian stocks fell for a third day, with the regional benchmark index heading for its lowest close in almost a year, as speculation the U.S. Federal Reserve will announce further measures to stimulate the economy failed to temper concern Europe’s debt crisis will worsen.

Toyota Motor Corp., a carmaker that gets 28 percent of sales from North America, sank 2.5 percent in Tokyo after the yen touched a post-World War II record, harming the outlook for the country’s exporters. BlueScope Steel Ltd., Australia’s biggest steelmaker, slumped 5.7 percent after it swung to a loss in the second half. Inpex Corp., Japan’s largest oil explorer, declined 3.9 percent as crude fell for a third day.

The MSCI Asia Pacific Index dropped 1 percent to 118.38 as of 7:40 p.m. in Tokyo, headed for its lowest close since September 2010. Almost three stocks declined for each that advanced on the measure, which rose as much as 0.4 percent.

Global equities erased more than $8.2 trillion in market value in the past four weeks as investors took flight after reports showed the world’s biggest economy is slowing, sparking speculation Federal Reserve Chairman Ben S. Bernanke will signal this weekend a third-round of Fed asset purchases to help sustain the economic recovery.

“It’s not certain to us what the Federal Reserve can say to calm people’s nerves,” Don Williams, chief investment officer at Platypus Asset Management Ltd. in Sydney, said in a Bloomberg Television interview. “Stocks are cheap but the outlook for most companies is murkier than it’s been since 2008. This period of volatility that we’re in has still got a way to play out.”

Nikkei, U.S. Futures

Japan’s Nikkei 225 Stock Average slipped 1 percent, after swinging between gains and losses at least 17 times. Singapore Straits Times Index fell 0.1 percent, paring losses of as much as 1.9 percent. Australia’s S&P/ASX 200 Index lost 0.5 percent, having swung between gains and losses at least 10 times.

China’s Shanghai Composite Index retreated 0.7 percent, while Hong Kong’s Hang Seng Index added 0.5 percent at the close, after rising as much as 1.4 percent and falling as much as 1.8 percent.

Futures on the Standard & Poor’s 500 Index advanced 0.9 percent today, having swung between a gain of as much as 1 percent and a decline of as much as 1 percent earlier. In New York, the index fell 1.5 percent on Aug. 19 as the cheapest price-earnings ratios since 2009 failed to lure investors amid concern the global economy is weakening.

Companies in the U.S. probably ordered less equipment in July as concern grew that the U.S. recovery was coming to a halt, economists said before reports this week.

U.S. Durable Orders

Bookings for durable goods excluding transportation fell 0.5 percent after rising 0.4 percent in June, according to the median forecast of 38 economists surveyed by Bloomberg News ahead of Commerce Department figures Aug. 24. Two days later, data from the same agency may show the economy grew even less in the second quarter than previously estimated.

Quanta Computer Inc., the world’s largest maker of laptop computers by sales, slid 2.6 percent to NT$53.5 in Taipei. Sony Corp., the maker of Bravia televisions and PlayStation game consoles, dropped 1 percent to 1,578 yen in Tokyo. Fanuc Ltd., Japan’s No. 1 maker of industrial robots, declined 4.1 percent to 11,650 yen.

Japanese exporters dropped after the yen touched a post World War II record high of 75.95 per dollar on Aug. 19. The yen fell to 76.73 per dollar today from 76.55 after Japanese Finance Minister Yoshihiko Noda said the government will take decisive action if needed in foreign-exchange markets as he has become “more concerned” about the currency’s appreciation. A stronger yen reduces the outlook for the nation’s exporters when their overseas income is repatriated.

Merkel Bond Resistance

Toyota Motor sank 2.5 percent to 2,700 yen in Tokyo. Nissan Motor Co., the Japanese carmaker that counts North America as its biggest market, lost 4.1 percent to 626 yen. Honda Motor Co., which gets about 83 percent of sales outside of Japan, slid 2.5 percent to 2,342 yen.

Concern about Europe’s sovereign debt crisis also grew after German chancellor Angela Merkel said she’ll resist pressure to back common euro-area bonds as a means to solve the region’s debt crisis. Investor calls for euro bonds intensified last week as European stocks fell to their lowest level in more than two years.

In Sydney, BlueScope Steel slumped 5.7 percent to 74.5 Australian cents after posting a loss of A$999 million ($1.04 billion) in the second half, compared with a net income of A$154 million a year earlier. The company said it will stop exports and shut a mill and a furnace, cutting about 1,000 jobs.

Earnings Surprises

Of the 556 companies in the MSCI Asia Pacific Index that that reported net income since July 11, about 45 percent surpassed estimates, while 32 percent fell short, according to data compiled by Bloomberg.

“We’re at a point where the alarm bells are sounding,” said Nick Maroutsos, a Sydney-based money manager who oversees the equivalent of about $4 billion at Kapstream Capital, said in a Bloomberg Television interview. “There needs to be put a stop gap in the market, so that people can have some sort of confidence that the Fed officials, as well as government officials, are standing by their side to help them through this.”

Central bankers from around the world will meet this week in Jackson Hole at an annual conference sponsored by the Federal Reserve Bank of Kansas City. Bernanke triggered a market rally last year at the Wyoming resort when he said the Fed was prepared to “do all that it can” to ensure an economic recovery and suggested it would buy more securities if growth slowed.

‘Bouncing Along Bottom’

The U.S. Federal Reserve hasn’t given up supporting the economy by printing money and buying more Treasuries, Mark Mobius, executive chairman of Templeton Asset’s emerging markets group, said in a telephone interview with Bloomberg Television today. “At this point, I do think we’re bouncing along the bottom,” Mobius, who helps manage about $50 billion, said.

Energy companies declined after Brent oil fell in London, narrowing its record premium to U.S. futures, as investors bet that Libyan production may recover after rebels entered the capital Tripoli in a push to force out leader Muammar Qaddafi.

Inpex declined 3.9 percent to 456,500 yen in Tokyo. Woodside Petroleum Ltd., Australia’s second-biggest oil and gas producer, lost 1.1 percent to A$34.53 in Sydney.

The MSCI Asia Pacific Index fell 13 percent this year through Aug. 19, compared with an 11 percent drop by the S&P 500 and a 19 percent decline by the Stoxx Europe 600 Index. Stocks in the Asian benchmark were valued at 12 times estimated earnings on average, compared with 11.3 times for the S&P 500 and 9.2 times for the Stoxx 600.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE