Asian Stocks Decline Most in Five Weeks After Abe Disappoints

  • Oil trading below $40, while U.S. consumer spending lackluster
  • Topix leads regional declines, followed by the Philippines

Asian stocks fell the most in five weeks, tracking declines in global equities, as a disappointing Japanese stimulus package and oil below $40 a barrel renewed concern the global economic recovery is faltering.

The MSCI Asia Pacific Index dropped 1.8 percent, the most since June 24, to 134.48 as of 4 p.m. in Hong Kong. Japan’s Topix index led losses to slide 2.2 percent after the yen climbed 1.5 percent against the dollar on Tuesday following the government’s announcement of 4.6 trillion yen ($45 billion) in extra spending for the current fiscal year. Risk-averse investors pushed U.S. stocks to their biggest decline in four weeks, while European shares also retreated, as oil fell to the lowest level in almost four months.

“After all the build-up, it’s a disappointment,” Shane Oliver, Sydney-based global investment strategist at AMP Capital Investors Ltd., which manages more than $110 billion, said of Abe’s stimulus package. This will be negative for Asian stocks today, “reflecting the negative response we’ve already seen in the U.S. and Europe overnight,” he said.

Japanese stocks are among the worst developed-markets performers this year as the yen surges and concern grows that the Bank of Japan’s unprecedented easing and the Abenomics growth program are struggling to deliver economic benefits. The cheaper oil prices are having a flow-on effect to commodities with a Bloomberg raw-materials gauge at the lowest level since early May, hurting many Asian share measures.

Regional Gauges

Australia’s S&P/ASX 200 Index dropped 1.4 percent as banking stocks slumped after the central bank cut borrowing costs to a record low and New Zealand’s S&P/NZX 50 Index decreased 0.7 percent.

Singapore’s STI Index lost 1.6 percent as commodities trader Noble Group Ltd. plunged as much as 22 percent, prompting a query from the Singapore exchange. South Korea’s Kospi Index fell 1.2 percent, the most in four weeks. The benchmark Philippine gauge declined 1.9 percent.

India’s S&P BSE Sensex dropped for a fourth day, falling 1 percent and heading for the longest losing streak in more than a month. The nation will present a new consumption tax bill in parliament later today, ending a decade-long wait for the passage of India’s biggest tax reform.

Casio Computer Co. fell 14 percent to a two-year low in Tokyo after quarterly earnings missed estimates. Philippine Long Distance Telephone Co. dropped 4.9 percent, set for its biggest two-day drop since March after it cut its dividend payout on Tuesday.

Hong Kong’s Hang Seng Index slumped 1.7 percent, led by a retreat in property developers, as trading resumed after the market was shut on Tuesday due to typhoon Nida. The Hang Seng China Enterprises Index of mainland companies listed in the city lost 1.6 percent. The Shanghai Composite Index advanced 0.2 percent amid speculation the nation’s futures exchange is planning to relax trading restrictions on stock-index contracts that sparked a plunge in volumes last summer.

Futures on the S&P 500 Index lost 0.3 percent. The U.S. equity benchmark index dropped 0.6 percent on Tuesday after lackluster consumer spending data in the world’s largest economy.

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