By Lynn Thomasson and Norie Kuboyama - Dec 6, 2011 11:49 AM GMT+0700
Dec. 6 (Bloomberg) -- Timothy Moe, a Hong Kong-based strategist at Goldman Sachs Group Inc., talks about the outlook for Asian stocks and Europe's sovereign debt crisis. He speaks from Singapore with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
Dec. 6 (Bloomberg) -- Jonathan Garner, the chief Asia and emerging-market strategist at Morgan Stanley in Hong Kong, talks about the region's stock markets. Garner also discusses Europe's sovereign debt crisis. He speaks with John Dawson on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
Asia stocks (MXAP) dropped for the first time in seven days after Standard & Poor’s put 15 European nations on watch for potential ratings downgrades. Metals retreated and the euro fell against the dollar.
The MSCI Asia Pacific Index fell 1.3 percent as of 1:11 p.m. in Tokyo after rallying 8.5 percent in the last six sessions. Standard & Poor’s 500 Index futures lost 0.4 percent. Copper declined 1.7 percent, snapping two days of gains. Oil slid 0.5 percent to $100.47 a barrel. Australian stocks extended declines and the so-called Aussie weakened against the dollar after the central bank cut interest rates.
“There’s concern deficits will worsen in European countries such as Italy and Spain, and that will prompt a downgrade of ratings for government bonds,” said Fumiyuki Nakanishi, a strategist at SMBC Friend Securities Co. in Tokyo.
Germany, France and four other nations may lose their AAA credit ratings depending on the result of a summit of European Union leaders on Dec. 9, S&P said yesterday. Fitch Ratings said a property-price correction in China will lead to loan portfolios souring, while the Reserve Bank of Australia cited concern that euro-area turmoil is dimming prospects for the global economy as it lowered its benchmark rate a second month.
The euro declined 0.2 percent to $1.3379. Growth in German factory orders slowed in October, while the euro region’s economy expanded in the third quarter at the same pace as the prior three months, according to economist estimates compiled by Bloomberg before the data is released today.
Australia’s S&P/ASX 200 Index sank 1.1 percent and the currency retreated 0.6 percent to $1.0209. The central bank reduced the overnight cash-rate target by a quarter percentage point to 4.25 percent.
‘Downside Risk’
Asian economies are facing “much greater downside risks” now because of the possibility of a recession in the U.S. and Europe and the threat of destabilizing capital flows, the Asian Development Bank said in a report today. Uncertainty over the world economy means officials in the region must have “sufficient flexibility” to adjust policies quickly, it said.
About seven stocks fell for one that rose in the MSCI Asia Pacific Index today. Declines in Japan’s Nikkei 225 Stock Average, Hong Kong’s Hang Seng Index and Taiwan’s Taiex index exceeded 1 percent.
Industrial & Commercial Bank of China Ltd. (1398) slumped 1.9 percent in Hong Kong. Chinese banks’ risk related to the property market is understated, Charlene Chu, head of China financial institutions at Fitch Ratings, told reporters on a teleconference yesterday.
Copper, Oil
S&P 500 futures expiring in December fell to 1,249.70, signaling the U.S. equity benchmark may pare yesterday’s 1 percent gain. The Institute for Supply Management’s non- manufacturing index unexpectedly fell to 52 last month from 52.9 in October, according to a report yesterday. Fifty is the dividing line between expansion and contraction and the measure was projected to rise to 53.9, according to the median forecast in a Bloomberg News survey.
Copper in London declined as much as 2.1 percent to $7,776 a ton. Gold for immediate delivery retreated 0.5 percent to $1,714.68 an ounce. January oil futures slid as much as 0.6 percent to $100.38 a barrel on the New York Mercantile Exchange.
The cost of insuring corporate bonds in Japan against non- payment rose, according to credit-default swap traders. The Markit iTraxx Japan index increased 3 basis points to 193 basis points as of 9:44 a.m. in Tokyo, Deutsche Bank AG prices show. That’s the first increase in more than a week, according to data provider CMA.
To contact the reporters on this story: Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net; Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
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