Asian Stocks Slide After Yen Caps Biggest Gain Since 2008 Crisis

  • Yen gains past 107 per dollar as Tokyo equity market reopens
  • China PMI stabilization reduces need for more stimulus

Asian stocks fell after the yen rose beyond 107 a dollar, weighing on the earnings outlook for Japanese exporters, while Chinese data suggested there may be less need to loosen monetary policy.

The MSCI Asia Pacific Index lost 1.3 percent to 129.55 as of 4:14 p.m. in Tokyo. Japan’s Topix index tumbled 3 percent after the yen capped the biggest two-day gain against the greenback since the global financial crisis on Friday, spurred by the central bank’s decision not to add to stimulus. Philippine shares fell the most since February before a presidential election next Monday, while markets in China and Hong Kong were closed for holidays.

Asia’s two largest stock markets, Japan and China, are among the world’s worst performers this year as central banks indicate a reluctance to increase measures to boost the economy. Thursday’s Bank of Japan decision was the first under Governor Haruhiko Kuroda where a majority of economists expected easing that didn’t materialize, while strategists now see China’s central bank keeping its main interest rate on hold until the fourth quarter.

“We expect short-term share market volatility to remain high,” said Shane Oliver, head of investment strategy at Sydney-based AMP Capital Investors Ltd., which oversees about $120 billion. “Failure by the BOJ to do more soon risks unwinding all the progress on inflation expectations seen under Abenomics, particularly with the yen breaking to ever higher levels.”

Japan was placed on a newly compiled list of countries the U.S. says it is monitoring for unfair interference in currency markets. Japanese Finance Minister Taro Aso brushed off the new measure, saying in a Nikkei interview it in no way constrains Japan’s ability to respond should any action be needed and that the yen’s one-sided speculative movements in the dollar-yen rate are “extremely concerning.”

China’s official factory gauge, the manufacturing purchasing managers index, stood at 50.1 in April, the nation’s statistics agency said Sunday. That’s the second consecutive month the indicator has been above 50, which indicates improving conditions. The non-manufacturing PMI, which signals conditions at services and construction firms, declined slightly to 53.5 last month after a big jump in March.

Macau’s April casino revenue dropped less than analysts estimated in a sign of stabilization as casinos shift their focus to attracting more casual gamblers and tourists.

Earnings season continues in Asia, with Japan Tobacco Inc. posting a first-quarter operating profit 41 percent up on the year earlier.

Apple Suppliers

Apple Inc. suppliers Murata Manufacturing Co. and TDK Corp. plunged in Tokyo after announcing earnings forecasts that missed analyst estimates. Murata sank 13 percent, while TDK dropped 9 percent. Other suppliers that didn’t report earnings also fell, including Alps Electric Co., which dropped 9.3 percent, while Sony Corp. -- which provides parts for smartphone cameras -- lost 4 percent.

Australia’s S&P/ASX 200 Index fell 0.2 percent, led by banks after Westpac Banking Corp.’s earnings missed estimates. Virgin Australia Holdings Ltd. sank 5.7 percent after the carrier estimated full-year profit that may be less than half that expected by analysts amid capacity cuts and weak travel demand.

The Philippine Stock Exchange Index dropped 1.5 percent after a poll released late on Friday showed tough-talking Davao City Mayor Rodrigo Duterte maintaining a comfortable lead a week before the presidential election. South Korea’s Kospi index declined 0.8 percent.

Futures on the S&P 500 added 0.1 percent. The gauge declined 0.5 percent on Friday amid lackluster earnings and few signs of a pickup in economic growth. Apple slumped for a seventh session a day after Carl Icahn said he sold his stake in the company.

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