Asian Stocks Decline on Global Growth Concern After Fed Comments

Updated on
  • Fed officials speaking over weekend say decision `close call'
  • Japan markets closed until Thursday for public holidays

Asian stocks declined amid concern global growth is faltering after Federal Reserve officials argued that a U.S. interest-rate increase is still warranted this year. Markets in Japan are closed.

BHP Billiton Ltd. sank 2.5 percent in Sydney as commodities companies led losses across the region. Esprit Holdings Ltd. sank 6.2 percent in Hong Kong, after David Webb, a shareholder activist, said the Financial Reporting Council may be investigating the company. China Railway Group Ltd. surged in Shanghai after saying it plans to inject manufacturing units into China Railway Erju Co. in exchange for assets.

The MSCI Asia Pacific Excluding Japan Index lost 1.8 percent to 404.83 as of 4:36 p.m. in Hong Kong. Three U.S. policy makers at the weekend separately explained their rationale for supporting a rate increase at one of the Fed’s two remaining meetings of 2015, citing declines in unemployment and other gains in the U.S. economy that should outweigh headwinds from slower growth abroad and turbulent financial markets.

“The key thing is that the markets are looking for global growth and we’re not seeing any,” Raymond Chan, the chief investment officer for Asia Pacific at Allianz Global Investors, which oversees about $344 billion, told Bloomberg TV in Hong Kong. “It’s the U.S. and China driving sentiment -- it’s pretty bad. I’d prefer if there was a U.S. rate rise once and for all, and that would clear away all the uncertainty. Volatility is going to continue to exist for a long while.”

China Outlook

Hong Kong’s Hang Seng Index declined 0.8 percent and Taiwan’s Taiex Index lost 1.8 percent. The Shanghai Composite Index gained 1.9 percent.

China’s economy isn’t as weak as it may look, according to a private survey.

“No collapse is nigh” in the aftermath of the stock market plunge and currency devaluation, according to the third-quarter China Beige Book survey published by New York-based CBB International. Capital expenditure rebounded slightly in the period and the services sector showed strength, the report said.

Australia’s S&P/ASX 200 Index fell 2 percent and South Korea’s Kospi index retreated 1.6 percent. New Zealand’s S&P/NZX 50 Index slipped 0.5 percent and India’s S&P BSE Sensex index decreased 0.3 percent.

E-mini futures on the S&P 500 slipped 0.1 percent on Monday. The Standard & Poor’s 500 Index lost 1.6 percent on Friday.

Fed Decision

Traders say the Fed will most likely postpone liftoff until 2016, based on the pricing of federal funds futures contracts. Investors will hear directly from Fed Chair Janet Yellen on Sept. 24, when she delivers a speech in Amherst, Massachusetts.

San Francisco Fed President John Williams, a policy centrist who has worked closely with Yellen, said Sunday that “in my mind, it was a close call” to delay a rate increase at last week’s Federal Open Market Committee meeting.

Williams’ comments on Fox News echoed remarks he made the day before, and chimed with the reasoning of St. Louis Fed President James Bullard and Richmond Fed President Jeffrey Lacker. Both weighed in on Saturday over the FOMC’s vote to leave rates near zero.

“We expect to remain bearish,” said Stewart Richardson, chief investment
officer at RMG Wealth Management LLP in London. “The Fed seems to be coming in for more criticism from all sides, and with markets falling after a dovish meeting, we believe that their credibility is now being openly questioned. We continue to believe that long-term investors should be holding a lot of cash at this point in the cycle.”