Tuesday, 20 August 2013

Stocks Fall With Commodities on Fed as India Rupee Slide

By Pratish Narayanan & Emma O’Brien - Aug 20, 2013 12:23 AM PT
Stocks fell to a six-week low and oil led declines in commodities on concern the Federal Reserve will curb bond purchases next month. Currencies from India’s rupee to Indonesia’s rupiah dropped amid an exodus that’s seen investors withdraw $8.4 billion from emerging-market exchange-traded funds this year.
The MSCI All Country World Index lost 0.5 percent at 8:24 a.m. in London as the Stoxx Europe 600 index slid 1 percent. The MSCI Asia Pacific Index dropped 1.8 percent while a measure of emerging-market stocks fell 1.6 percent. Standard & Poor’s 500 Index futures were little changed after the gauge touched a five-week low in New York. Indian 10-year bond yields rose to the highest level since 2001 while the rupiah fell 2.5 percent and the rupee dropped 0.8 percent. U.S. Treasury yields decreased 5 basis points after reaching a two-year high of 2.88 percent yesterday. The S&P GSCI index of commodities was down 0.9 percent.
Asian Stocks to Aussie Bonds Drop as Ringgit Slides; Metals Rise A man uses his mobile phone in front of electronic stock boards at the Australian Securities Exchange (ASX Ltd.) headquarters in Sydney. QBE Insurance Group Ltd. helped drive Australian shares down 0.9 percent after profit fell. Photographer: Ian Waldie/Bloomberg
Aug. 20 (Bloomberg) -- Paul Gait, mining analyst at Sanford C. Bernstein Ltd., discusses BHP Billiton Ltd.'s Jansen Canadian potash project and the outlook for Glencore Xstrata Plc. He speaks with Francine Lacqua on Bloomberg Television's "On the Move." (Source: Bloomberg)
Aug. 20 (Bloomberg) -- Robert Aspin, head of global equity investment strategy at Standard Chartered Plc, talks about the outlook for developed and emerging market stocks, the Indian rupee and Indonesian rupiah. Aspin also discusses Federal Reserve monetary policy. He speaks from Singapore with John Dawson on Bloomberg Television's "Asia Edge." (Source: Bloomberg)
Aug. 20 (Bloomberg) -- Richard Yetsenga, head of global markets research at Australia & New Zealand Banking Group Ltd., talks about Indonesia's rupiah and India's rupee. The rupiah fell to 10,500 per dollar yesterday for the first time since 2009, stocks dropped by the most in 22 months and government bonds plunged. The rupee plunged yesterday to a record low. Yetsenga also discusses Federal Reserve monetary policy. He speaks from Sydney with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
Aug. 20 (Bloomberg) -- Sean Darby, chief global equity strategist at Jefferies Group Inc. in Hong Kong, talks about the outlook for markets in Asia and his investment strategy. He speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
Aug. 20 (Bloomberg) -- Richard Titherington, chief investment officer for emerging markets at JPMorgan Asset Management, talks about the outlook for Indonesia and India, and investment strategy. He speaks from Singapore with John Dawson on Bloomberg Television's "On the Move." (Source: Bloomberg)
India’s rupee is at a record low, Thailand is in recession and Indonesia’s widest current-account deficit pushed the rupiah to the weakest level since 2009. The data are fueling pessimism in markets already concerned the Federal Reserve, which publishes minutes of its July meeting tomorrow, will start reducing bond purchases in September. Australia’s central bank signaled further interest-rate cuts remain a possibility, according to minutes of its Aug. 6 meeting.
“The U.S. is going to unwind a historical amount of stimulus and it’s going to make markets nervous,” said Nader Naeimi, the head of dynamic asset allocation at AMP Capital Investors Ltd., which manages more than $130 billion. “In the next couple of months, until U.S. bond yields settle down, we’re going to see some choppy trades” in global equities.

Stocks Slide

About eight stocks fell for each that gained on the Asia-Pacific index, which decreased to 131.30. Real estate and construction firms led declines in Indonesia, where the benchmark index tumbled as much as 20 percent from a high in May.
Everbright Securities Co. (601788), the Chinese brokerage whose trading error whipsawed stocks last week, plunged by the 10 percent daily limit in Shanghai. The firm faces possible fines and more restrictions on business as the error threatens to erode confidence in China’s market.
Everbright, a state-controlled brokerage down 23 percent in Shanghai this year, was banned by China’s securities regulator from propriety trading for three months after making 23.4 billionyuan ($3.8 billion) of erroneous buy orders on Aug. 16. The broker also said it mispriced 10 million yuan of government bonds in a trade yesterday.

Treasury Yields

Australian 10-year government note yields slipped 4 basis points to 3.98 percent after five consecutive business days of increases to as high as 4.05 percent, data compiled by Bloomberg show. New Zealand 10-year yields fell 2 basis points to 4.65 percent. New Zealand’s central bank Governor Graeme Wheeler announced property loan restrictions from October to slow house-price growth.
India’s 10-year bond yields jumped to as high as 9.47 percent, the most since 2001, before easing to 9.21 percent.
Ten-year U.S. Treasury yields were down 6 basis points at 2.82 percent today, after rising 5.5 basis points in New York. The bonds yielded 40 basis points more than notes in an index of debt from the Group of Seven nations yesterday, the biggest premium since May 2010.

Jackson Hole

U.S. central bankers, who have indicated an improving jobs market could spur cuts to their $85 billion in monthly asset purchases, gather this week in Jackson Hole, Wyoming, to discuss monetary policy. Officials will probably begin to scale back bond buying next month, according to 65 percent of economists surveyed by Bloomberg from Aug. 9-13. The first step may be reducing purchases by $10 billion a month, the median estimate of analysts showed.
Indonesian shares led declines in emerging Asian markets, after sliding 5.6 percent yesterday when data showed the current-account deficit widened to a record last quarter. A report this month also showed the economy grew less than 6 percent for the first time since 2010 in the second quarter. Yesterday’s slump created buying opportunities in bank and consumer shares, according to PT Schroder Investment Management.
Foreigners sold a net $3 billion of Indian stocks and bonds in July amid the slowest growth in a decade in Asia’s third-largest economy, according to data compiled by Bloomberg. The rupee slid to a record low of 64.12 against the dollar today, while the S&P BSE Sensex index of equities dropped 0.4 percent, extending yesterday’s 1.6 percent decline.

Trading Volatility

Intraday trading volume in Jakarta is 82 percent more than the 30-day average today while volumes on India’s S&P BSE Sensex Index are 60 percent higher, Bloomberg-compiled data show.
Thailand’s SET Index lost 2.8 percent today after dropping 3.3 percent yesterday following a report showing the economy unexpectedly shrank in the second quarter, pushing the country into a recession. The government also cut its growth forecast.
The baht weakened 1.1 percent to 31.73 per dollar, declining for a second day. The Korean won depreciated 0.5 percent to 1,120.85 and Malaysia’s ringgit was headed for the weakest close since June 2010, falling to 3.2985 against the greenback.
The Bloomberg Dollar Index, which tracks the greenback against 10 major peers, was up 0.1 percent after rising for a second consecutive business day in New York yesterday, gaining 0.1 percent.
Silver for immediate delivery declined 2.6 percent to $22.5675 an ounce after rallying to $23.6225 yesterday, the highest level since May 14. Spot platinum slid 0.3 percent to $1,504.15 an ounce, falling for a third day, while palladium was down 0.5 percent at $747.85 an ounce.
West Texas Intermediate crude was down 1 percent at $106.05 a barrel, after falling 0.3 percent yesterday as the threat of a storm in the Gulf of Mexico dissipated, removing a risk to oil and gas production in the area.
Gasoline futures declined a third day, losing 0.9 percent.
To contact the reporters on this story: Pratish Narayanan in Singapore at pnarayanan9@bloomberg.net; Emma O’Brien in Wellington at eobrien6@bloomberg.net
To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net