Asian Stocks Drop on Fed Rate Bets; Topix Gains as Yen Weakens

  • Fed Vice Chairman Fischer says still chance of 2016 rate hike
  • South Korean, Taiwanese share gauges lead regional declines

Asian stocks fell for a third day as crude futures dropped and investors weighed the prospects for higher interest rates in the U.S. Shares in Japan climbed on speculation there will be more stimulus.

The MSCI Asia Pacific Index declined 0.3 percent to 138.7 as of 4 p.m. in Hong Kong. Japan’s Topix rose 0.6 percent as the yen weakened after Bank of Japan Governor Haruhiko Kuroda said there is “sufficient chance” for more easing in September. Federal Reserve Vice Chairman Stanley Fischer signaled that a 2016 rate hike is still under consideration, echoing hawkish comments from New York Fed President William Dudley before a speech by Chair Janet Yellen later this week at Jackson Hole, Wyoming.

“The Fed is a bit all over the shop so it’s going to be Janet Yellen’s job this Friday to try to centralize all of these messages into a coherent message that markets can react to,” Matthew Sherwood, head of investment strategy at Perpetual Ltd. in Sydney, which manages about $21 billion, said on Bloomberg Radio. “There’s very little reason the Fed needs to raise rates. I don’t think inflation is getting out of control.”

Asian stocks have rallied 22 percent from a February low as lackluster data from the world’s biggest economies fueled speculation central banks will continue to support them with stimulus and loose monetary policy. Investors are looking for cues from the Fed on the timing of potential interest-rate increases. While the odds the Fed will raise borrowing costs in December climbed to 51 percent, traders are betting there’s only a 22 percent chance of tightening next month, data compiled by Bloomberg show.

The Topix gauge climbed for a second day as the yen fell 0.5 percent to 100.74 a dollar. The BOJ won’t hesitate to act based on discussions on the results of a comprehensive review at its September 20-21 board meeting, BOJ Governor Kuroda said in an interview published Saturday in the Sankei newspaper.

Chinese Gauges

Chinese stocks dropped amid concern the rising odds of a U.S. rate increase will weaken the yuan and on investor anxiety that state-backed funds sold equities. The Shanghai Composite Index decreased 0.8 percent to the lowest close since Aug. 12, the Hang Seng China Enterprises Index of mainland companies listed in Hong fell 0.2 percent, while the Hang Seng Index was little changed.

Taiwan’s Taiex index declined 0.6 percent, South Korea’s Kospi index lost 0.7 percent and Singapore’s Straits Times Index dropped 0.3 percent. Australia’s S&P/ASX 200 Index fell 0.2 percent, while New Zealand’s S&P/NZX 50 Index climbed 0.8 percent to a record high. India’s S&P BSE Sensex index was down 0.3 percent.

Santos Ltd. tumbled 6.8 percent in Sydney after Australia’s third-biggest oil and gas producer reported a first-half net loss of $1.1 billion as it took a $1.05 billion charge on its Gladstone liquefied natural gas export project in Queensland. Zhuzhou CRRC Times Electric Co. plunged 8.5 percent in Hong Kong after Credit Suisse Group AG downgraded the stock to underperform. Shenzhou International Group Holdings Ltd. jumped 9.8 percent to a record after the textile maker reported a 29 percent increase in first-half profit.

Futures on the S&P 500 Index were steady. The U.S. equity benchmark index lost 0.1 percent on Friday as a two-month rally ran out of steam amid signs investors are again growing skeptical of the long-awaited rebound in corporate profits.

West Texas Intermediate crude dropped 1.5 percent after surging 9.1 percent last week. Oil declined after Iraq, OPEC’s second-biggest producer, said it will boost oil exports in the next few days amid a supply glut.

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