Tuesday, 30 July 2013

Asia Stocks Pare Loss Before Fed Meeting as Ringgit Drops

By Kyoungwha Kim & Emma O’Brien - Jul 31, 2013 8:23 AM GMT+0400
Asian stocks fell as losses in Japan and India overwhelmed a rally in China. The dollar held gains against major peers before the Federal Reserve meets today. South Korea’s won andMalaysia’s ringgit slid as metals rose.
The MSCI Asia Pacific Index of regional equities lost 0.4 percent by 1:16 p.m. in Tokyo, trimming the first monthly advance since April to 2.1 percent. India’s S&P BSE Sensex fell 1 percent and Japan’s Topix Index (TPX) slipped 0.6 percent while the Shanghai Composite Index rose 0.6 percent. Standard & Poor’s 500 Index futures were little changed. The won fell 0.7 percent as the ringgit headed for the weakest close since 2010 and the Australian dollar slid 0.4 percent. Gold climbed 0.5 percent.
Japan Drives Asian Stocks Lower Before Fed as Ringgit, Corn Sink The Topix, posting the biggest gain among the largest developed markets tracked by Bloomberg this year with a 33 percent advance, is up 0.5 percent this month, after retreating in June and May. Photographer: Kiyoshi Ota/Bloomberg
July 31 (Bloomberg) -- Jonathan Garner, Hong Kong-based chief Asia and emerging-market strategist at Morgan Stanley, talks about the economic outlooks for China and Japan, and his investment strategy. He speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
July 30 (Bloomberg) -- Mark Mobius, executive chairman of Templeton Emerging Markets Group, talks about the Chinese government's plans to reduce overcapacity, the outlook for Chinese and Asian markets, and investment strategy. He spoke with Bloomberg's Tony Jordan in Bangkok yesterday. (Source: Bloomberg)
July 29 (Bloomberg) -- Lewis Wan, Hong Kong-based chief investment officer at Pride Investments Group Ltd., talks about China stocks and his investment strategy. He speaks with Zeb Eckert on Bloomberg Television's "On the Move." (Source: Bloomberg)
July 29 (Bloomberg) -- Geoffrey Lewis, global market strategist at JPMorgan Asset Management, talks about China's economic outlook and financial market. Lewis also discusses Federal Reserve monetary policy. He speaks from Singapore with Zeb Eckert on Bloomberg Television's "On the Move." (Source: Bloomberg)
The Fed has indicated its $85 billion monthly bond purchases could be trimmed should the U.S. economy meet its forecasts, though Chairman Ben S. Bernanke has said there’s no fixed schedule for tapering stimulus. The government may say today that gross domestic product growth slowed last quarter, while employment data are also scheduled this week. Chinese President Xi Jinping pledged to stabilize growth while pursuing reforms, the official Xinhua News Agency said yesterday.
“The market will pore through every word in that statement,” Bob Van Munster, head of Australian equities at Tyndall Investment Management Ltd. in Sydney, which oversees about $21 billion, said by phone, referring to the Fed’s post-meeting announcement. “The overall message is we are coming to an end of quantitative easing but we are going to manage it according to the data that comes out.”

Earnings Reports

The Topix’s decline was led by utility shares on the busiest day of Japanese earnings with Panasonic Corp., Mitsubishi UFJ Financial Group Inc. and Honda Motor Co. among those reporting. Twelve of the 33 industry groups fell, with volume 20 percent below the 30-day intraday average. The gauge is headed for a 0.8 percent gain this month.
South Korea’s Kospi (KOSPI) Index fell 0.1 percent today, poised for a 2.7 percent advance in July, while Australia’s S&P/ASX 200 Index climbed 0.9 percent, rising for an eighth day in the longest stretch of gains since January. Indian stocks fell for a sixth day, the longest losing run in almost four months, led by losses in banks and consumer shares.
China will maintain steady second-half expansion amid “extremely complicated domestic and international conditions,” the Xinhua report said. The government is targeting 7.5 percent growth this year, a goal that could be under threat after a second quarterly slowdown. The central bank resumed its reverse repo operation yesterday for the first time since February to ease a cash squeeze in the money market.

Growth, Jobs

The Shanghai Composite Index increased as property developers, cement companies and appliance makers rallied.China Vanke Co. and Poly Real Estate Group Co. advanced at least 5 percent. The gauge, which doubled in 10 months through August 2009 as the government poured $652 billion of stimulus into building roads, railways and housing, has tumbled about 43 percent from its high, destroying $748 billion in market value, data compiled by Bloomberg show.
Gross domestic product in the U.S. probably climbed 1 percent in the second quarter, after expanding 1.8 percent in the first three months of 2013, according to the median of 84 estimates compiled by Bloomberg. Payrolls data, to be released Aug. 2, will show employers added 185,000 workers in July, after increasing 195,000 in June, a separate survey shows. The jobless rate probably fell to 7.5 percent from 7.6 percent, according to economists’ projections.

Ringgit, Rupee

The Bloomberg Dollar Index, which tracks the greenback against 10 major peers, was little changed at 1,026.90 after adding 0.3 percent yesterday to cut a 1.3 percent drop in July. The yen was steady at 98.04 per dollar, near a one-month closing high reached July 29, and was little changed at 130 per euro, after weakening 0.1 percent yesterday and gaining 0.4 percent July 29. The euro was little changed at $1.3258.
The ringgit slipped 0.7 percent to 3.2475 per dollar, bringing its drop in July to 2.7 percent, a third month of depreciation, after Fitch Ratings cut the nation’s credit outlook to negative from stable, citing rising debt levels.
The decline pushed the ringgit beyond the limits of the Bollinger band, signaling a reversal may be imminent, data compiled by Bloomberg show. That’s the biggest deviation in developing markets. Stochastic oscillators also showed the ringgit is oversold.
India’s rupee weakened 0.8 percent to 60.98 per dollar, sliding for a third day, according to data compiled by Bloomberg. The Reserve Bank of India Governor Duvvuri Subbarao held the keyinterest rate at 7.25 percent yesterday and said measures taken this month to tighten cash supply “will be rolled back” as the currency stabilizes.

Copper, Gold

The Australian dollar fell to 90.38 U.S. cents after sliding the most since June 19 yesterday. The currency is down 1.3 percent in July. Reserve Bank of Australia Governor Glenn Stevens said yesterday that inflation data may indicate there is room for cuts to benchmark borrowing costs. Traders saw a 95 percent chance that the RBA will cut its cash rate by 25 basis points, or 0.25 percentage point, at its Aug. 6 meeting, swaps data yesterday compiled by Bloomberg showed.
Industrial metals rose on the London Metal Exchange, with nickel adding 1.1 percent, copper gaining 0.9 percent and aluminum climbing 0.5 percent. Silver was up 0.8 percent.
To contact the reporters on this story: Emma O’Brien in Wellington at eobrien6@bloomberg.net; Kyoungwha Kim in Singapore at kkim19@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net