Tuesday, 02 June, 2015

Stocks in Asia Slide as Yen Weakens to 2002 Low; Aussie Rallies

(Bloomberg) — Most Asian stocks fell and the yen slid to a 12 1/2-year low amid stronger-than-expected U.S. factory data that boosted expectations the Federal Reserve will raise interest rates. Australia’s dollar rose after its central bank held interest rates at a record low and gave little guidance on future policy moves. The MSCI Asia Pacific Index decreased for a second day, down 0.7 percent by 1:42 p.m. in Tokyo as benchmarks in Australia and South Korea dropped at least 1.1 percent. The yen weakened to less than 125 per dollar for the first time since 2002, as the prospect for higher borrowing costs this year spurred demand for the greenback. The Aussie snapped a five-day fall and the Korean won followed Japan’s currency lower. Australia’s central bank left its key interest rate unchanged as it awaits the impact of two trims in the first half of the year. India is forecast to cut rates as policy makers from Europe to Asia embrace stimulus amid an uneven global recovery. Optimism three reductions since November in China have arrested a slowdown in that economy spurred the steepest gain in Shanghai stocks Monday since January. European leaders and the International Monetary Fund agreed to step up the intensity of talks over Greece. “We’re getting increased volatility now because the market has risen to such high levels,” Khiem Do, the Hong Kong-based head of multi-asset strategy at Baring Asset Management Ltd., said. “China’s central bank will have to ease further because the economy is still quite sluggish. This will continue to provide liquidity to fuel the market rally. Should there be a Greek default, there’s likely to be a negative market reaction.” ‘Pump and Dump’ The U.S. releases its May payrolls report on Friday, with economists predicting employers added 228,000 workers to nonfarm payrolls, following an increase of 223,000 in April. The Institute for Supply Management’s factory index climbed in May from an almost two-year low as orders increased at the fastest pace in five months, the Tempe, Arizona-based group said Monday. Readings above 50 indicate expansion and the May figure of 52.8 exceeded the Bloomberg survey median forecast of 52. Hong Kong’s Hang Seng Index decreased 0.7 percent while he Hang Seng China Enterprises Index was down 1.3 percent after a 1.4 percent gain Monday that was the first rise in almost a week. The Shanghai Composite Index was little changed after a 4.7 percent jump Monday, paring last week’s 1 percent retreat. Chinese stocks in Hong Kong are “probably the largest pump and dump in history” given a number of companies stock prices are likely being “manipulated upward,” Carson Block, founder of research firm and short seller Muddy Waters LLC, said in a TV interview. The Enterprises index, which tracks Chinese shares listed in Hong Kong, rose 1.4 percent Monday. Solar Panels, Ducks On May 20, 47 percent of Chinese solar panel maker Hanergy Thin Film Power Group Ltd.’s market value vanished in minutes and it’s now under probe by the Hong Kong Securities & Futures Commission. A group of 11 creditors have asked for a meeting to voice their concerns and discuss their $82 million loan, people familiar with the matter said. Zhong’ao Holdings Group Co., a closely held maker of smoked duck leg and other foods, cited increasing difficulty getting credit as it defaulted on bank loans ahead of a bond deadline next week. The Kospi index in Seoul fell 1.2 percent, weighed by Hyundai Motor Co., which slumped to the lowest level in more than four years the carmaker’s domestic sales declined for a second month. Won, Rupee The won slid as much as 0.7 percent to its weakest level since March as the yen’s slide spurred speculation South Korea’s central bank will intervene and cut interest rates to protect exports. The nation’s three-year bond yield dropped three basis points to 1.73 percent, below the benchmark interest rate of 1.75 percent. “Korea’s government will continue its smoothing operations until the yen’s drop against the dollar calms,” Jeon Seung Ji, a Seoul-based currency analyst at Samsung Futures Inc., wrote in a report. One-month non-deliverable forwards for India’s rupee were little changed at 64.04 per dollar before a central bank policy meeting. Thirty-four of 41 economists surveyed by Bloomberg predict the benchmark repurchase rate will be lowered from 7.5 percent. Platinum, Oil In Australia, all 10 major industry groups retreated in the S&P/ASX 200 Index, down 1.2 percent, with Alumina Ltd. and BHP Billiton Ltd., the world’s biggest mining company, driving losses. The Aussie strengthened 0.6 percent to 76.55 U.S. cents after sinking almost 2.8 percent the past five days. The U.S. currency is up against 13 of 16 major peers over the past week after Federal Reserve Chair Janet Yellen said in May she expects to raise benchmark borrowing costs in 2015. The yen has dropped more than 30 percent since 2012 as the Bank of Japan carries out unprecedented bond buying. The yen was at 124.67 per dollar after earlier touching 125.05, the weakest level since Dec. 6, 2002. Copper in London swung between gains and losses, trading at $6,014.00 a metric ton, close to a six-week settlement low. Prices were earlier extending May’s 5.1 percent decline, the first monthly loss since January, amid concern over the economies of China and the U.S., the two biggest consumers of the metal. A lack of supply disruptions in the last month may add to a forecast global surplus this year of the metal, analysts at Barclays Plc said in a report published Monday. China’s new low-voltage cable standards starting Sept. 1 may accelerate a switch from copper to aluminum alloy, Goldman Sachs Group Inc. said in a separate report the same day. Platinum for immediate delivery fell to the lowest level since March 18 and was near the cheapest relative to gold since 2013 amid concerns over global growth. The metal declined 0.1 percent to $1,102.12 an ounce Tuesday. An ounce of platinum bought only 0.93 ounces of gold. The white metal is mostly used for automotive catalytic converters, which account for more than 50 percent of usage, according to Johnson Matthey Plc. Gold is held mainly by investors and used in jewelry, with industrial consumption limited to about 10 percent. West Texas Intermediate crude oil fluctuated after slipping 0.2 percent on Monday. Brent oil slid 0.2 percent to $64.75 per barrel. Demand for the commodity is picking up and supply is slowing, Ali al-Naimi, Saudi Arabia’s oil minister, said as he arrived in Vienna for an OPEC meeting set for June 5. U.S. crude supplies probably fell through May 29, according to a Bloomberg survey before government data Wednesday. Archr LLP is Authorised and regulated by the Financial Conduct Authority (FCA reference 617163). Archr LLP is not covered by the Financial Services Compensation Scheme (FSCS). Archr is registered in England and Wales No. OC371018. Registered office Chancery House, 30 St Johns Road, Woking, Surrey, GU21 7SA This message may contain confidential or privileged information. If you are not the intended recipient, please advise us immediately and delete this message. The unauthorised use, disclosure, distribution and/or copying of this e-mail or any information it contains is prohibited. 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