Asian Stocks Drop to Two-Month Low as Health-Care Shares Decline

  • Energy producers get some respite as crude rebounds from slump
  • China data show 45th monthly decline in producer prices

Asian stocks fell to the lowest level in two months, led by declines among health-care and consumer companies, with Japanese equities bearing the brunt of losses. A slump in energy shares stabilized as crude prices rebounded.

The MSCI Asia Pacific Index fell 0.6 percent to 129.87 as of 5:08 p.m. in Tokyo, poised for the lowest close since Oct. 6. The gauge extended its 2015 drop to 5.8 percent as weak commodity prices and concern about slowing growth in China weighs on the region’s equities. Data Wednesday showed a 45th monthly slide in Chinese producer prices after evidence of ongoing weakness in Chinese trade dragged global shares lower Tuesday.

“You’ve got this massive confluence of events conspiring for a negative outcome,” said Tim Schroeders, a portfolio manager who helps oversee about $1 billion in equities at Pengana Capital Ltd. in Melbourne. “Things are feeding on themselves at the moment as China goes through a period of very weak economic data, overhanging concerns about the Fed raising rates in the next week or so and some company specific things which overall are eroding any positive sentiment.”

Regional Gauges

All 10 industry groups on the MSCI Asia gauge retreated. Australia’s S&P/ASX 200 Index declined 0.6 percent and Taiwan’s Taiex Index retreated 1.4 percent, while Singapore’s Straits Times Index fell 0.4 percent. South Korea’s Kospi index closed little changed and New Zealand’s S&P/NZX 50 Index added 0.3 percent.

Japan’s Topix index slid 0.8 percent. Komatsu Ltd. fell in Tokyo, bringing its two-day decline to 3 percent, after the world’s second-largest maker of mining and construction equipment said it faces another tough year ahead as falling commodity prices cool customers’ investment plans. Insurance companies led losses on the Topix index after Barclays Plc lowered its price target on several insurers. Dai-ichi Life Insurance Co. sank 3.4 percent, while T&D Holdings Inc. fell 2.6 percent.

Hong Kong’s Hang Seng Index slid 0.5 percent and a gauge of Chinese shares trading in Hong Kong slipped 1.1 percent. The Shanghai Composite Index climbed 0.1 percent. BYD Co. and Dongfeng Motor Group Co. surged after people familiar with the matter said China plans to introduce a new round of subsidies for rural auto purchases, covering passenger vehicles with engines smaller than 1.6 liters, mini-commercial vehicles and light pickup trucks.

China Inflation

China’s consumer inflation picked up last month, boosted by price gains for food and services, signaling demand in the world’s second-largest economy is stabilizing after accelerated fiscal stimulus and a year of interest rate cuts. Firming inflation and slower declines in imports signal some stabilization in demand after six central bank interest rate cuts since November last year.

The MSCI Asia Pacific Energy Index lost 0.2 percent after increasing for most of the day as oil advanced from a six-year low. The gauge dropped 6.3 percent over the previous two days. West Texas Intermediate crude futures climbed 1.7 percent to $38.14 a barrel today.

Futures on the Standard & Poor’s 500 Index added 0.3 percent after the underlying gauge lost 0.7 percent Tuesday. Traders are pricing in an 80 percent chance that the Federal Reserve will lift interest rates from near zero next week.

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