Asia Stocks, Commodities Drop on Europe Crisis
Asian stocks fell for the first time in three days, the dollar and yen strengthened, and commodities extended yesterday’s declines amid concern European policy makers will struggle to stem the region’s debt crisis.
The MSCI Asia Pacific Index lost 1.1 percent as of 9:44 a.m. in Tokyo. Standard & Poor’s 500 Index futures slid 0.6 percent. The dollar climbed against 12 of its 16 major peers. The yen gained 0.2 percent to 103.52 per euro. Oil dropped 1.5 percent to $79.98 a barrel in New York, copper sank 5.5 percent to $6,855 a metric ton in London, and immediate-delivery gold decreased 1.1 percent to $1,590.60 an ounce.
Concern Greece will default on its debt is dragging global equities and commodities toward their biggest quarterly losses since 2008, when Lehman Brothers Holdings Inc.’s bankruptcy froze credit markets. The European Commission is resisting a push to impose bigger writedowns on bank holdings of Greek sovereign debt than those previously agreed on, a European official said.
“The market is priced for some kind of Lehman-like event,” Brian Barish, the Denver-based president of Cambiar Investors LLC, which oversees about $8 billion, said in a Bloomberg Television interview. “It’s clear that this is coming to a head. If for some reason, Greece goes into an uncontrolled default and it spreads to Italy, which is a $3 trillion bond market, I don’t know how you’re going to put Humpty Dumpty back together again in terms of the world economy.”
About two shares fell for every one that gained on MSCI’s Asia Pacific Index, which snapped a two-day, 4.4 percent rally. The gauge has dropped 17 percent this quarter, on course for its largest quarterly loss since the three months ended September 2008. Japan’s Nikkei 225 Stock Average slid 0.9 percent, Australia’s S&P/ASX 200 Index declined 1.7 percent and South Korea’s Kospi Index dropped 0.7 percent.
Futures expiring in December indicate the S&P 500 may extend yesterday’s 2.1 percent drop. Advanced Micro Devices Inc. (AMD) fell in extended trading after the second-largest maker of processors for personal computers cut its forecasts for third- quarter sales and profits, citing glitches.
German lawmakers will vote today on changes to the European Financial Stability Facility. The plan before the lower house in Berlin would allow the fund to buy bonds of distressed states and offer emergency loans to governments. and offer emergency loans to governments.
Italy will auction as much as 9 billion euros ($12.2 billion) of bonds today. Italy’s five-year credit-default swaps were at 462.5 basis points yesterday, showing traders see a 34 percent chance for the nation’s nonpayment, compared with 4.8 percent for the U.S.
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