Asian Stocks Slump as U.S Consumer Spending Data Adds to Recovery Concerns

By Shani Raja and Toshiro Hasegawa - Oct 3, 2011 8:02 AM GMT+0700
Enlarge image

Japan’s Nikkei 225 Stock Average fell 1.8 percent. The MSCI Asia Pacific Index declined 18 percent this year through Sept. 30. Photographer: Tomohiro Ohsumi/Bloomberg

Asian stocks fell, extending the regional benchmark index’s biggest quarterly decline in three years, after U.S. consumer spending slowed as incomes unexpectedly dropped, souring the earnings outlook for exporters.

Toyota Motor Corp. (7203), the world’s largest carmaker, fell 2.8 percent in Tokyo. Canon Inc., the biggest global camera-maker, lost 2.3 percent. James Hardie Industries SE (JHX), a building- materials supplier that gets almost 70 percent of sales from the U.S., sank 4.4 percent in Sydney. BHP Billiton Ltd. (BHP), the world’s No. 1 mining company, dropped 2 percent after oil and metal prices slid.

“The U.S. is not falling into recession, and we haven’t seen enough evidence yet, but it’s definitely slowing down,” said Diane Lin, a fund manager with Sydney-based fund Pengana Capital Ltd., which manages about $1.1 billion in global assets. “We might face more risks, particularly in a market that hasn’t had enough of a correction.”

The MSCI Asia Pacific Index fell 1.6 percent to 111.34 as of 9:55 a.m. in Tokyo. About 14 stocks fell for each that rose in the measure. The gauge has dropped 19 percent this year amid concern the global economy is poised for another recession as Europe’s debt crisis worsens and U.S. economic growth slows.

Japan’s Nikkei 225 Stock Average fell 2.1 percent. Australia’s S&P/ASX 200 slumped 2.3 percent, while New Zealand’s NZX 50 Index declined 1 percent.

Futures on the Standard & Poor’s 500 Index slipped 0.3 percent today. In New York, the index fell 2.5 percent on Sept. 30, sending the measure to its biggest quarterly drop since 2008, after reports from China and Germany fueled concerns the global economy is slowing.

Consumer Spending

Consumer spending in the U.S. slowed in August as incomes unexpectedly dropped for the first time in almost two years, forcing households to dip into savings. Purchases rose 0.2 percent after a 0.7 percent increase in July, Commerce Department figures showed on Sept. 30. Incomes decreased 0.1 percent, the first decline since October 2009. Economists had forecast incomes would rise 0.1 percent, according to a Bloomberg survey.

Gains in U.S. payrolls in September were probably too small to reduce joblessness and manufacturing almost stalled as concern mounted that the global recovery was losing momentum, economists said before reports this week.

Oil fell today, extending declines after the worst quarter since 2008. Crude for November slid as much as 1.6 percent in electronic trading in the New York. A measure of primary metals traded in London fell 3.4 percent on Sept. 30, when copper futures declined for a third straight quarter, the longest slump since 2001.

“While a deceleration of the global economy has largely been priced into the markets, we’re not seeing anything to change this,” said Kenichi Hirano, general manager and strategist at Tachibana Securities Co. in Tokyo. “For this reason, we’ll likely see stocks move lower.”

The MSCI Asia Pacific Index declined 18 percent this year through Sept. 30, compared with a 10 percent drop by the S&P 500 and an 18 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 11.5 times estimated earnings on average, compared with 11.4 times for the S&P 500 and 9.5 times for the Stoxx 600.

The Asia Pacific index tumbled 16 percent in the third quarter, the biggest drop since 2008, as concern mounted that Europe’s sovereign-debt crisis combined with a slowdown in the U.S. economy may drag the world back into recession.

To contact the reporters on this story: Shani Raja in Sydney at sraja4@bloomberg.net. Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net.

To contact the editor responsible for this story: John McCluskey at j.mccluskey@bloomberg.net.