Asia Stocks Head for Lowest Since 2012 as Commodity Firms Slump

  • Japan's Topix slides 4.4% as markets across Asia join rout
  • ``Volatility is going to stay high,'' says BofA's Suzuki

Asian stocks fell, with the benchmark index heading for the lowest close since November 2012, as a selloff in U.S. and European markets spread to the region and commodity producers tumbled.

BHP Billiton Ltd., the world’s biggest mining company, lost 6.7 percent in Sydney, while PetroChina Co. and Jiangxi Copper Co. slumped more than 5 percent in Hong Kong. Mitsui OSK Lines Ltd. plunged 7.4 percent in Tokyo after Daiichi Chuo KK said it filed for bankruptcy protection. Kobe Steel Ltd. retreated 11 percent after cutting its annual profit forecast by more than half amid slowing sales in China.

The MSCI Asia Pacific Index retreated 3.1 percent to 120.94 as of 3:57 p.m. in Hong Kong, on course for a 17 percent slump this quarter. About $800 billion was wiped from global equities on Monday amid a selloff in commodity-trading firms that’s sent investors toward the safety of the yen and sovereign bonds. Glencore Plc dropped by a record in Hong Kong, tracking losses in London.

“The slowdown in China is spreading to other Asian economies, Brazil and Australia, and weakness in emerging countries could echo throughout the overall world economy,” said Toshihiko Matsuno, chief strategist at SMBC Friend Securities Co. in Tokyo. “We still don’t know when market fears will end about China’s slowdown, and because of this investors are turning to cash and safe assets.”

Faltering China

Markets have been whipsawed as China’s economy falters despite stimulus efforts. A gauge of industrial profits fell the most in at least four years, a report showed on Monday, ahead of manufacturing data this week that should provide further clues on the health of Asia’s largest economy. The specter of higher interest rates in the U.S. is also weighing on sentiment, with Federal Reserve officials ramping up rhetoric in favor of a 2015 rate increase.

Japan’s Topix index lost 4.4 percent. Hong Kong’s Hang Seng Index fell 2.9 percent to the lowest level since July, 4, 2013. The Shanghai Composite Index retreated 2 percent. Australia’s S&P/ASX 200 Index declined 3.8 percent and New Zealand’s NZX 50 Index fell 1.5 percent. Markets in South Korea are closed for a holiday and Taiwan’s equity market was shut because of a typhoon.

India Rates

India’s S&P BSE Sensex Index erased a loss of as much as 1.3 percent after the nation’s central bank lowered interest rates more than expected to bolster the economy. Governor Raghuram Rajan cut the benchmark repurchase rate to 6.75 percent from 7.25 percent, the lowest since May 2011.

The Standard & Poor’s 500 Index slumped 2.6 percent on Monday amid a rout in commodity and biotechnology shares, while a gauge of global equities fell to a two-year low. Glencore Plc slumped 29 percent, dragging the Bloomberg World Mining Index to its lowest level in almost seven years.

E-mini futures on the S&P 500 rose 0.2 percent after the underlying gauge’s drop on Monday sent the measure to a one-month low. The Nasdaq Biotechnology Index sank 6 percent following its worst week since 2011. Valeant Pharmaceuticals International Inc. fell the most in four years.

Data Monday showed household spending climbed more than forecast in August, indicating consumers will help the U.S. economy muddle through any global slowdown.

New York Fed President William C. Dudley said on Monday that the U.S. economy was “doing pretty well” and that the U.S. central bank will probably raise rates later this year. John Williams, head of the San Francisco Fed, also reiterated his expectation that borrowing costs will be boosted in 2015, adding that the jobless rate will probably fall to below 5 percent this year.

“Volatility is going to stay high,” Dan Suzuki, a strategist at Bank of America Corp., told Bloomberg TV in New York. “There’s a general sense that people don’t want to go all into these markets.”

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