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Business News/ Market / Stock-market-news/  Asian stocks drop as yen climbs on oil, China PMI; ruble rallies
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Asian stocks drop as yen climbs on oil, China PMI; ruble rallies

Hong Kong's Hang Seng Index retreated 1.4% and the Hang Seng China Enterprises Index sank 0.8%

The MSCI Asia Pacific Index slipped 0.8% in Tokyo, as benchmarks in Tokyo, Hong Kong, Jakarta and Singapore plunged more than 1%. Photo: AFPPremium
The MSCI Asia Pacific Index slipped 0.8% in Tokyo, as benchmarks in Tokyo, Hong Kong, Jakarta and Singapore plunged more than 1%. Photo: AFP

Hong Kong: Asian stocks fell, with the regional index at a two-month low, and the yen rallied as oil’s slump and shrinking Chinese manufacturing stoked concern the global economy may falter. Ruble forwards jumped after interest rates were raised by the most since 1998.

The MSCI Asia Pacific Index slipped 0.8% by 1:55 pm in Tokyo, as benchmarks in Tokyo, Hong Kong, Jakarta and Singapore plunged more than 1%. The yen strengthened 0.6% toward a one-month high versus the dollar as the yield on 10-year US notes fell two basis points. Oil in New York fell a fifth day, sinking 0.6%. One-month Russian ruble forwards jumped 6.3% versus the dollar. Indonesia’s rupiah erased losses amid speculation the central bank intervened to stem losses.

Energy companies are driving a retreat in global stocks as increasing crude output coincides with declining demand amid slowing global growth. A preliminary index of Chinese purchasing managers signaled contraction, according to HSBC Holdings Plc and Markit Economics. The Bank of Russia raised its key rate by 6.5 percentage points to support the ruble. The US Federal Reserve starts its two-day monetary policy review today.

“It’s a flight to quality," said Wontark Doh, head of overseas fixed-income investment in Seoul at Samsung Asset Management, which has $121.9 billion in assets. Russia’s “tightening of monetary policy caused volatility in global markets. US Treasuries are the beneficiary."

‘Considerable time’

Standard & Poor’s 500 Index futures were little changed, paring a gain of as much as 0.3%, after the US gauge swung to a drop of 0.6%. The US central bank will consider whether to retain a pledge to keep rates near zero for a “considerable time" after they ended their bond-buying programme in October.

A gauge of energy companies in the MSCI Asia Pacific Index fell 28% from a 4 September high for the year through yesterday. Santos Ltd, an Australian oil producer, and Malaysia’s SapuraKencana Petroleum Bhd have led the slide, plunging 51% in the period. Santos was 2.6% lower today while SapuraKencana was little changed.

Hong Kong’s Hang Seng Index retreated 1.4% and the Hang Seng China Enterprises Index sank 0.8%. The Shanghai Composite Index added 1% as brokerages climbed on speculation the factory gauge at a seven-month low means further stimulus will be forthcoming.

Flash PMI

The so-called flash manufacturing purchasing managers’ index from HSBC Holdings Plc and Markit Economics fell to 49.5, while economists surveyed by Bloomberg projected a reading of 49.8 for December, from 50 last month. It’s the first time since May that the gauge has slipped below 50, the threshold between expansion and contraction. A similar gauge of Japanese factory activity is also due today.

“The China PMI falling below 50 is bad," said Will Yun, a commodities analyst at Hyundai Futures Corp. in Seoul. “It is a signal that there is worse to come. It gives more reason for the Chinese government to use stimulus."

Japan’s Topix index retreated 1.9%, Australia’s S&P/ASX 200 Index dropped 0.7% in a sixth straight day of declines, while the Kospi index in Seoul fell 0.9%.

The MSCI Emerging Markets Index fell 0.5%, sliding an eighth day for the longest losing streak since September. The Jakarta Composite Index slumped 1.9%, while Singapore’s Straits Times Index and Thailand’s benchmark gauge tumbled 2%.

WTI, brent

West Texas Intermediate (WTI) crude fell to $55.59 a barrel in New York, headed for its lowest settlement since May 2009. The US benchmark contract is down 43% this year. Brent crude for January settlement lost 0.8% to $60.60 a barrel in London, also a five-year low.

The yen strengthened to 117.24 per dollar after surging 0.8% on Monday, while the euro advanced 0.2% to $1.2461. Norway’s krone climbed 0.5%.

Australia’s dollar added 0.3% to 82.32 US cents after the central bank reiterated that it expects a period of stability in interest rates, which are at a record low.

The Bloomberg Dollar Spot Index dropped 0.2%. Yields on 10-year US Treasuries fell two basis points, or 0.02 percentage point, to 2.10%, dropping for the sixth time in seven sessions.

Offshore prices showed the ruble climbing 6.7% for the first advance in seven days, after sliding beyond 60 per dollar on Monday. The country’s central bank, which has been trying to stem the currency’s tumble through intervention, boosted the key rate to 17 percent from 10.5%, the largest single increase since 1998, when Russian rates soared past 100% and the government defaulted on its debt.

‘They’re panicking’

One-month forwards on the currency, whose prices partly reflect interest-rate differentials, surged percent to 62.7 per dollar after sinking 11% yesterday. The Market Vectors Russia exchange-traded fund rose about 3.5% in after- hours trading in New York.

“They are throwing darts in the dark," Slava Rabinovich, chief executive officer at Diamond Age Capital Advisers in Moscow, which manages $240 million in Russian assets, said by phone. “They are panicking. The ruble will spike back up, but the spike is going to be very short-lived."

Indonesia’s rupiah was little changed at 12,718 per dollar after sliding on Monday to its weakest close since the Asian financial crisis, amid speculation a selloff in emerging-market assets is gaining traction. The rupiah fell as much as 1.9% to 12,940 per dollar, according to prices from local banks compiled by Bloomberg.

The lack of domestic demand for dollars today caused the rupiah to pare losses and the central bank also “came into the market," said Wiling Bolung, head of balance-sheet trading at PT Bank ANZ Indonesia.

Turkey’s lira rebounded 0.8% from an all-time low struck after police detained journalists suspected of links with US-based cleric Fethullah Gulen. The lira weakened as much as 4.1% to 2.3926 on Monday, a record against the dollar on a closing basis, before ending the day at 2.3763. Bloomberg

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Published: 16 Dec 2014, 09:09 AM IST
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