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Asian Stocks Sink With Aussie on Tech Rout; Nickel Climbs

Asian stocks slid, pushing the regional index down the most in three weeks, while emerging-market and commodity currencies weakened as a renewed selloff in U.S. technology shares cut demand for riskier assets. Nickel extended its longest rally since 2010.

The MSCI Asia Pacific Index sank 1 percent by 12:06 p.m. in Tokyo, its biggest drop since March 20. Fast Retailing Co. drove a 2.3 percent tumble in Japan’s Nikkei 225 Stock Average, which is headed for the steepest weekly drop among developed markets. Standard & Poor’s 500 Index futuresrose 0.1 percent. The yen held gains as peers from Australia to Malaysia weakened. Turkey’s lira slipped as Moody’s Investors Service cut the country’s credit outlook. Nickel climbed a 10th day and gold held gains.

The Nasdaq Composite Index slid the most since 2011 yesterday as the biggest winners of the U.S. bull market took a renewed hit. China’s inflation rate was 2.4 percent in March, while producer prices fell 2.3 percent, close to the 2.2 percent decline predicted by economists surveyed by Bloomberg. India is expected to show faster growth in factory output for February while Germany and Italy issue price data before a U.S. consumer confidence report.

“As market sentiment worsens in the U.S., investors tend to focus on negatives, creating a downward spiral,” said Juichi Wako, a Tokyo-based equity strategist at Nomura Holdings Inc., the nation’s biggest brokerage. “We’re seeing a necessary correction in technology shares.”

Index Valuations

The MSCI Asia Pacific Index is down 1.1 percent this week, while Japan’s broader Topix index headed for a 6.7 percent slump, the biggest weekly drop since June. Asia-Pacific gauge stocks trade at 13.6 times company earnings, compared with a valuation of 35 for the Nasdaq Composite and a multiple of 16.9 for the S&P 500, which sank 2.1 percent to an almost two-month low yesterday. The MSCI All-Country World Index trades at 16.8 times earnings, data compiled by Bloomberg show.

The Nikkei 225 is set for a 7.2 percent drop in the week, the worst performance among 24 developed markets tracked by Bloomberg, while the Hang Seng Index in Hong Kong has the biggest increase among the 24 markets.

Fast Retailing, Asia’s biggest clothing retailer and the stock with the largest weighting on the Nikkei 225, sank 8 percent today, headed for the biggest one-day decline since June and on track for a 13 percent loss for the week. The company cut its annual profit forecast late yesterday amid rising costs and weakening demand for casual wear. Softbank Corp., the mobile operator that’s the second-heaviest company in the Nikkei 225, is down 14 percent this week.

Australia, Korea

Australia’s S&P/ASX 200 Index lost 1 percent, as South Korea’s Kospi gauge fell 0.8 percent, led by services stocks, machinery companies and financial shares. The NZX 50 Index dropped 0.3 percent, with Xero Ltd., a Wellington-based online accounting software developer that soared more than 300 percent last year, down 5.6 percent, bringing its decline in the week to 17 percent, the most on record.

Tencent Holdings Ltd., China’s largest internet company, dropped 4 percent in Hong Kong, with declines by the operator of the WeChat mobile messaging platform dragging the Hang Seng Index to a 0.6 percent loss. Hong Kong Exchanges & Clearing Ltd. jumped 11 percent amid speculation the bourse operator will benefit most from a plan to link China’s two largest share-trading venues. The Hang Seng Index China Enterprises Index dropped 2 percent, led by insurers and banks.

China’s Economy

China’s producer-price index retreated following the previous month’s 2 percent drop, as the government seeks to shore up growth with spending on railways and tax relief for small businesses. Data yesterday showed exports from China fell 6.6 percent in March, with economists expecting a gain of 4.8 percent. Imports dropped 11.3 percent after rising 10.1 percent in February.

Germany also reports final inflation numbers for March today, while in the U.S., producer prices and the University of Michigan survey of consumer confidence in April are due.

The yen was little changed at 101.57 per dollar after climbing 0.5 percent in the last session. Japan’s currency has strengthened 1.7 percent this week, posting the biggest advance among 10 Asian currencies tracked by Bloomberg.

Currency Losses

Australia’s dollar weakened 0.4 percent with New Zealand’s currency down 0.5 percent today, while Malaysia’s ringgit and the Thai baht dropped at least 0.3 percent. Korea’s won added 0.3 percent even as local authorities warned about herd behavior in the currency markets yesterday. Turkey’s lira slid 0.4 percent to 2.1162 per greenback.

“The Aussie and kiwi are lower mainly because the equity markets have fallen out of bed overnight,” said Imre Speizer, a market strategist at Westpac Banking Corp. in Auckland. “It’s a classic risk-aversion theme.”

Indonesia’s rupiah lost 0.8 percent to 11,445 per dollar amid prospects presidential frontrunnerJoko Widodo will need the support of minor parties to run as the main opposition candidate. Unofficial results of April 9’s parliamentary election showed the Jakarta governor, known as Jokowi, was shy of the votes needed to run for president on his own. Similar contracts on the Indian rupee weakened 0.4 percent.

Claims for U.S. jobless benefits dropped to 300,000 last week, the least than at any time since before the last recession, data showed.

“Good weekly jobless claims data released on the day failed to place a longer-term floor under the declines suffered,” Tony Farnham, an economist at Patersons Securities Ltd. in Perth, wrote in an e-mail today. “Technology and biotech-related companies once again returned to the unloved list as questioning of current valuations in these two segments resumed in earnest,”

Earnings Season

The Dow Jones Internet Composite Index sank 4.2 percent in the U.S. session and the Nasdaq Biotechnology Index plunged 5.6 percent, the most since 2011. Alexion Pharmaceuticals Inc. dropped 7.5 percent, the biggest slump in the S&P 500. The drugmaker, which trades at 101 times reported earnings, has lost 22 percent since closing at a record on Feb. 27.

Alcoa Inc. this week unofficially began the U.S. earnings season, recording quarterly profit that exceeded analysts’ estimates. Earnings for members of the S&P 500 probably climbed 1 percent in the first quarter, analysts now forecast, after anticipating a 6.6 percent increase in January.

Australian government bonds followed gains in U.S. Treasuries, with yields falling four basis points, or 0.04 percentage point, to 4.02 percent, set for a one-month low. Ten-year Treasury yields were little changed today at 2.65 percent after retreating four basis points in New York to the lowest close since March 13.

Commodity Markets

Nickel for three-month delivery on the London Metal Exchange added 0.5 percent to $17,170 a metric ton amid concern global demand for the metal will exceed supply after Indonesia, the world’s biggest nickel supplier, barred unprocessed-ore exports. Copper lost 0.3 percent while aluminum dropped 0.4 percent.

Gold was little changed at $1,319.17 an ounce following a 0.6 percent advance yesterday. The precious metal is headed for a 1.2 percent gain this week, a second weekly climb. Palladium slid 0.4 percent and silver declined 0.1 percent.

West Texas Intermediate crude dropped 0.2 percent to $103.25 a barrel after falling 0.2 percent yesterday. WTI is up 2.1 percent this week. Brent lost 0.1 percent today.

 

Bloomberg

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