Asian Stocks Retreat Amid U.S. Rate Hike Bets, Japan GDP Data

  • Taiwan shares gain before new president takes charge Friday
  • Topix closes higher amid swings as Japan’s GDP tops estimates

Asian stocks fell for the first time this week as U.S. reports bolstered the case for higher interest rates. Japanese shares closed higher after fluctuating as investors assessed the need for future stimulus after economic growth topped estimates.

The MSCI Asia Pacific Index slid 0.7 percent to 126.64 as of 4:19 p.m. in Hong Kong. Global equities have struggled to extend gains since reaching a four-month high on April 20 as investors scrutinize U.S. data for clues to the timing of the Federal Reserve’s next policy move. In Tokyo, figures showed first-quarter gross domestic product expanded by an annualized 1.7 percent, beating economists’ estimates for 0.3 percent growth.

“There’s an addiction to stimulus,” Tim Schroeders, a Melbourne-based portfolio manager at Pengana Capital Ltd., who helps oversee about $1.2 billion in assets, said by phone. “People are more worried about the stimulus than the trajectory of the economy. This highlights imbalances between markets and the real economy. In Japan, a stronger economy means a stronger yen and that’s been interpreted as bad for the market.”

Japan’s Topix index finished 0.2 percent higher, after fluctuating for most of the day, while the Nikkei 225 Stock Average lost 0.1 percent. There was little in the figures to indicate the country is pulling free of the cycle of expansion and contraction that’s plagued the economy for decades, despite more than three years of Abenomics and record monetary stimulus from the central bank. The economy shrank a revised 1.7 percent in the previous quarter.

U.S. Rates

In the U.S., reports Tuesday showed inflation and new-home construction increased. Futures traders pushed the odds for a June increase to 12 percent, from 4 percent on Monday. Atlanta Fed President Dennis Lockhart and San Francisco’s John Williams said two rate increases this year may be warranted, while Dallas Fed President Robert Kaplan said a hike may come soon.

China’s stocks fell to the lowest level in two months, led by material and technology stocks, amid signs of a slowing economy. The Shanghai Composite Index dropped 1.3 percent, the lowest close since March 10. The Hang Seng China Enterprises Index of mainland shares traded in Hong Kong decreased 1.5 percent.

President Xi Jinping this week vowed to press ahead with plans to cut capacity at state-owned enterprises, even as data over the weekend showed industrial production, fixed-asset investment and retail sales all missed estimates. Home prices rose in the most Chinese cities in more than two years in April, with gains in second-tier cities surpassing advances in larger hubs, data released Wednesday by the National Bureau of Statistics showed.

South Korea’s Kospi index slid 0.6 percent, while Australia’s S&P/ASX 200 Index lost 0.7 percent. Singapore’s Straits Times Index fell 0.3 percent. Hong Kong’s Hang Seng Index sank 1.5 percent. New Zealand’s S&P/NZX 50 Index added 0.1 percent.

Taiwan Transition

Taiwan’s Taiex Index gained 0.2 percent at the close, erasing earlier losses of as much as 1 percent. The island’s independence-leaning president-elect Tsai Ing-wen takes charge on Friday, inheriting an economy that’s been contracting year-on-year for three straight quarters.

Suzuki Motor Corp. plunged 9.4 percent in Tokyo after saying it used an improper method to test the fuel efficiency of its vehicles, widening a scandal for Japan’s auto industry that first originated with Mitsubishi Motors Corp. NTT Docomo Inc. and KDDI Corp. dropped at least 1.1 percent, declining for a second day after Bloomberg News reported the government may take further steps to pressure them to offer cheaper plans. Asia Pacific Telecom Co. surged 7.1 percent in as the company’s chairman told the Taipei Times it planned to create a robotic services unit.

Futures on the S&P 500 Index slipped 0.1 percent. The U.S. equity benchmark index declined 0.9 percent on Tuesday as consumer-staples companies plunged and utility shares declined after rising Treasury yields made their dividends less attractive.

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