Asian Stocks Drop as Jobs Report Adds to Growth Concern

By Adam Haigh - Jun 4, 2012 9:01 AM GMT+0700

Asian stocks fell after a U.S. payrolls report showed fewer jobs were added to the world’s largest economy than the most pessimistic forecast, adding to concern the global economy is slowing. Japan’s Topix Index is headed for its lowest closing level since 1983.

Sony Corp. (6758), a Japanese exporter of consumer electronics that gets about one fifth of its sales in the U.S., fell 1.4 percent. BHP Billiton Ltd. (BHP), the world’s biggest mining company, dropped 1.9 percent as metals prices declined. Cnooc Ltd. (883), China’s largest offshore oil producer, lost 3.6 percent as crude extended last week’s slump.

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June 4 (Bloomberg) -- Nick Maroutsos, co-founder of Sydney-based Kapstream Capital, talks about the outlook for global financial markets, the U.S. economy and his investment strategy. Maroutsos also discusses Europe's sovereign debt crisis. He speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)

The MSCI Asia-Pacific Index dropped 2.1 percent to 109.01 as of 10:46 a.m. in Tokyo. The gauge tumbled 10 percent in May, the biggest monthly loss since October 2008, when global markets tumbled in the wake of the collapse of Lehman Brother Holdings Inc. Equities continued declines into June as the U.S. jobs report added to concern global growth is slowing and Europe’s debt crisis is worsening.

“People are more concerned about a return ‘of’ their capital, as opposed to a return ’on’ their capital,” said Nick Maroutsos, who oversees about A$3 billion ($2.9 billion) as managing director and co-founder of Sydney-based Kapstream Capital. “The recovery is still going to continue to have fits and starts. We need something more substantial” from central banks “that’s going to get investors back into the market. Until we get that, we’re not going to see risk assets perform well.”

Japan’s Topix fell 2.1 percent, below the lowest level seen during the 2008-2009 financial crisis and headed for its lowest close since December 1983. The gauge has fallen more than 20 percent from this year’s high on March 27, entering a so-called bear market. The Nikkei 225 Stock Average dropped 2.1 percent.

U.S. Payrolls

In Seoul, the Kospi index dropped 2.6 percent. Australia’s S&P/ASX 200 Index slid 1.7 percent and Hong Kong’s Hang Seng Index retreated 2.4 percent.

Futures on the Standard & Poor’s 500 Index lost 0.7 percent today. The index slumped 2.5 percent in New York on June 1 and the Dow Jones Industrial Average erased its 2012 gains after the jobs report.

U.S. payrolls climbed by 69,000 last month and the jobless rate rose to 8.2 percent. The Institute for Supply Management’s factory index fell after reaching a 10-month high.

“The poor U.S. payrolls number should start to deflate investor optimism about U.S. growth that we’ve encountered, leaving few places for investors to hide,” said Gerard Minack, global developed-market strategist at Morgan Stanley in Sydney.

Sony, Toyota

Sony fell 1.4 percent to 999 yen, dropping below 1,000 yen in Tokyo trading for the first time since 1980. Toyota Motor Corp., Asia’s biggest carmaker, retreated 3.6 percent to 2,903 yen. Honda Motor Co., the third-biggest, slid 2.7 percent to 2,392 yen and Nissan Motor Corp. declined 3.1 percent to 712 yen.

China’s non-manufacturing industries expanded at the slowest pace in more than a year as export orders declined and weakness in real estate countered strength in retailing and leasing, an official survey indicated.

The purchasing managers’ index fell to 55.2 in May from 56.1 in April, the National Bureau of Statistics and China Federation of Logistics and Purchasing said in statements yesterday in Beijing. That’s the lowest reading since March 2011 when the federation started seasonally adjusting the data.

The Bloomberg China-US Equity Index of the most-traded Chinese companies in the U.S. tumbled 3.4 percent to 87.22 on June 1 in New York, the biggest slump since Nov. 21.

Metals, Oil

The London Metal Exchange Index of prices for six industrial metals including copper and aluminum dropped 0.8 percent on June 1 and the Thomson Reuters/Jefferies CRB Index of raw materials slumped 1.7 percent.

BHP Billiton lost 1.9 percent to A$31.13. Rio Tinto Group, the world’s third- largest mining company, declined 3.3 percent to A$53.71.

Oil dropped for a fifth day, trading at the lowest level in almost eight months. Crude for July delivery fell as much as 0.8 percent lower in electronic trading on the New York Mercantile Exchange after falling 8.4 percent last week.

Cnooc lost 3.6 percent to HK$13.24. Woodside Petroleum Ltd. (WPL), Australia’s second-largest oil producer, retreated 3 percent to A$30.99.

Declines in the equity market has dragged valuations on the Asian benchmark down to 11.4 times estimated earnings on average through June 1, compared with 12.2 times for the S&P 500 and 9.8 times for the Stoxx 600.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net