Asian Stocks Fall After Fed Minutes as Commodity Shares Retreat

  • Fed funds show June U.S. rate hike chance now one-in-three
  • BHP Billiton slides in Sydney, Tencent drops in Hong Kong

Asian stocks dropped toward a six-week low as commodity companies led declines after minutes of the Federal Reserve’s April meeting showed policy makers discussed raising interest rates as early as next month. 

The MSCI Asia Pacific Index lost 1 percent to 125.36 as of 4:12 p.m. in Hong Kong. The Fed’s statement indicated most policy makers said a rate hike would be appropriate in June if the economy continued to improve. That sent the dollar up to weigh on raw-material prices. Fed Chair Janet Yellen and her colleagues remained split over when those conditions would be met. Traders are now expecting about a one-in-three chance of a hike next month, up from 4 percent on Monday.

“There is this enormous policy uncertainty,” said Randal Jenneke, Sydney-based fund manager at T. Rowe Price Group Inc., which oversees about $765 billion. “The Fed has changed the goal posts so many times, everyone is confused. No one knows when they’re going to raise rates and no one knows what’s going to be the key thing to trigger the decision.”

The Fed minutes jolted markets that had been swinging around amid uncertainty over the U.S. central bank’s intentions. The MSCI Asia Pacific Index fell 4.1 percent this year through Wednesday, while Japanese shares slumped as the yen traded little changed 1 following a 1 percent slide in the last session. The Topix index slipped 0.1 percent after rising as much as 1.1 percent earlier on Thursday.

Commodity producers led the retreat across Asia after the surging dollar weighed on metals and oil prices. West Texas Intermediate crude slipped 1.5 while copper for three-month delivery decreased for a second day. BHP Billiton Ltd., the world’s largest mining company, fell 3.7 percent in Sydney, while Rio Tinto Group slid 3.3 percent.

Australia’s S&P/ASX 200 Index slipped 0.6 percent after data showed growth in employment in April missed economists’ estimates. New Zealand’s S&P/NZX 50 Index sank 1.1 percent. Auckland International Airport Ltd. tumbled 4.2 percent, the most since August. Singapore’s Straits Times Index declined 1.4 percent.  

Taiwan’s Taiex index lost 0.8 percent, ending a three-day gain. Taiwan’s independence-leaning president-elect Tsai Ing-wen takes charge on Friday of an economy that’s been contracting year-on-year for three straight quarters. From trade to innovation and talent retention, Tsai will need to avoid the legislative policy paralysis that kept previous governments from turning things around.

Tencent Drops

Hong Kong’s Hang Seng Index declined 0.7 percent and the Shanghai Composite Index was little changed. South Korea’s Kospi index declined 0.5 percent.

Tencent Holdings Ltd. fell the most in three months in Hong Kong after Asia’s biggest instant message company said uncertainty about China’s economy could cause near-term challenges for its booming advertising business.

Mainland-listed steelmakers rallied after the government called on state-owned enterprises to further cut capacity to support prices. Wuhan Iron & Steel Co. gained, while Beijing Shiji Information Technology Co. surged 7.6 percent. President Xi Jinping has vowed to press ahead with plans to reduce capacity at SOEs, while trying to boost the role of privately owned technology and service businesses. The State Council, or cabinet, on Wednesday called for a 10 percent capacity cut at companies managed by the central government.

India’s S&P BSE Sensex Index sank 0.9 percent. Sun TV Network Ltd. plunged 12 percent, the most since June 8, after trends showed the Dravida Munnetra Kazhagam party is set to lose Tamil Nadu state election.

Futures on the S&P 500 index slipped 0.2 percent, reversing earlier gains. A rally of as much as 0.7 percent in the underlying measure petered out Wednesday as investors sold stocks that provide high dividend yields after the 10-year Treasury rate spiked as much as 11 basis points. Financial shares recorded their best performance in a month after JPMorgan Chase & Co., the largest U.S. bank by assets, raised its quarterly dividend.

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