Asian Stocks Drop as European Crisis Talks Deadlocked
Asian stocks fell amid concern that talks among European leaders to resolve the region’s debt crisis are deadlocked, curbing the earnings outlook for the region’s exporters.
Brother Industries Ltd., an office-equipment maker that gets 30 percent of its sales in Europe, slid 2.5 percent in Tokyo. Rio Tinto Group (RIO), the world’s third-largest mining company, retreated 2.4 percent in Sydney as falling copper prices dragged raw-material shares lower. Newcrest Mining Ltd. (NCM), Australia’s biggest gold producer, slid 1.9 percent as JPMorgan Chase & Co. downgraded its recommendation on the shares.
The MSCI Asia Pacific (MXAP) Index dropped 0.4 percent to 123 at 7:09 p.m. in Tokyo, with about five stocks falling for every three that rose. The gauge climbed 4.9 percent this quarter through Sept. 21 as central banks from Europe, the U.S., Japan and China took action to stimulate economic growth.
“A period of consolidation in the month ahead looks the more likely outcome,” said George Boubouras, Melbourne-based head of investment strategy at UBS AG’s Australian wealth management unit. The Swiss bank oversees about $1.5 trillion in assets. “In Europe, there will continue to be some lingering challenges. As we approach the end of the quarter, investors will fine-tune and adjust their portfolios across all the asset classes. This will include some profit-taking and portfolio rotation.”
Hong Kong’s Hang Seng slid 0.2 percent and China’s Shanghai Composite gained 0.3 percent, reversing earlier losses. Taiwan’s Taiex added 0.2 percent.
The MSCI Asia Pacific Index’s 8 percent advance this year compares with a 16 percent gain on the Standard & Poor’s 500 Index and a 13 percent jump on the Stoxx Europe 600 Index. The Asian benchmark traded at 12.8 times estimated earnings compared with 14.1 for the S&P 500 and 12.2 for the Stoxx Europe 600 Index. (SXXP)
Last week, the MSCI Asia Pacific Index dropped 0.1 percent, halting a two-week advance, as an escalating territorial dispute between Japan and China and signs of a deeper economic slump overshadowed unexpected stimulus measures by the Bank of Japan.
Futures on the Standard & Poor’s 500 Index slid 0.4 percent today. Consumer spending in the U.S. probably stagnated in August after adjusting for inflation, showing the economic expansion is struggling to gain momentum, economists said before a report due Sept. 28.
German Chancellor Angela Merkel and French President Francois Hollande underlined Franco-German disagreement over the weekend as they clashed on a timetable to introduce joint oversight of the region’s banking sector, with Merkel rebuffing Hollande’s appeal to activate it “the earlier, the better.”
Stocks linked to Europe declined. Brother slumped 2.5 percent to 786 yen in Tokyo. Makita Corp. (6586), a Japanese power-tool maker that gets more than a third of its sales in the region, lost 0.5 percent to 2,951 yen. HSBC Holdings Plc, Europe’s largest bank, slipped 0.9 percent to HK$73.45 in Hong Kong.
China’s manufacturers and retailers are less optimistic about sales than they were three months ago and more companies are cutting jobs, according to a survey modeled on the U.S. Federal Reserve’s Beige Book.
The China Beige Book, through interviews of more than 2,000 company executives and bankers from Aug. 9 to Sept. 3, found limits to monetary easing after interest-rate cuts in June and July, with banks loosening credit while fewer companies are borrowing, according to a summary from CBB International LLC, the New York-based researcher that conducted the survey.
Rio Tinto slid 2.4 percent to A$54.97 in Sydney. BHP Billiton Ltd. (BHP), the world’s largest mining company, retreated 0.9 percent to A$33.41. Copper for delivery in three months declined 1.2 percent in London.
Newcrest Mining lost 1.9 percent to A$28.14 as JPMorgan downgraded the shares to “neutral.”
Sumitomo Bakelite Co. (4203), a resin maker, sank 5.7 percent to 297 yen in Tokyo after cutting its first-half profit forecast 30 percent.
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