Asian stocks fell with U.S. equity-index futures, Australia’s dollar weakened to a more-than five-month low and copper slid after Chinese factory and retail data added to evidence a slowdown is deepening. Brent crude oil dropped to a two-year low.
The MSCI Asia Pacific excluding Japan Index lost 1 percent by 1:11 p.m. in Hong Kong, where the Hang Seng China Enterprises Index dropped 1.5 percent. Standard & Poor’s 500 Index futures fell 0.4 percent after the U.S. gauge dropped 0.6 percent Sept. 12. The Aussie retreated a sixth day while Indonesia’s rupiah weakened to a two-month low versus the dollar. Crude in London and New York sank at least 0.6 percent. Copper fell 0.9 percent. Sweden’s krona weakened as the country faced a hung parliament. Gold climbed from an eight-month low.
Royal Bank of Scotland Group Plc cut its 2014 estimate for Chinese economic expansion to 7.2 percent from 7.6 percent after August industrial output growth was the weakest since the global financial crisis. Factory data is due in the U.S., where the fastest increase in retail sales in four months bolstered speculation the Federal Reserve will signal a move toward interest-rate increases at a meeting this week. The Bank for International Settlements warned international borrowing and low volatility are increasing risk for emerging-market assets.
“The Chinese data was not ideal at all,” said Mao Sheng, an analyst at Huaxi Securities Co. in Chengdu. “If the Fed were to raise rates earlier than expected, that wouldn’t be good for Asia stocks as there will be an outflow of funds to the U.S.”
The gauge of Chinese companies listed in Hong Kong, which fell the most since March last week, is heading for its lowest close in more than a month. The Hang Seng Index dropped 0.8 percent and the Shanghai Composite Index slipped 0.1 percent.
Factory production in China rose 6.9 percent in August from a year earlier, the statistics office reported Sept. 13, down from 9 percent in July and below the 8.8 percent growth predicted by economists. It was the slowest pace outside the Lunar New Year holiday period of January and February since December 2008. Growth in fixed-asset investment slowed to 16.5 percent, while retail sales expanded 11.9 percent, trailing the 12.1 percent rate estimate and easing from 12.2 percent in July.
Reports last week showed a second straight monthly decline in imports and a 40 percent drop in the broadest measure of new credit. Growth in gross domestic product may ease to between 6.5 percent and 7 percent in the third quarter should data for September also be weak, according to Australia & New Zealand Banking Group Ltd.
South Korea’s Kospi index retreated 0.2 percent. The S&P/ASX 200 Index dropped 0.9 percent in Sydney as the Australian dollar fell below 90 U.S. cents for the first time since March. Analysts in Bloomberg surveys have a median year-end estimate of 92 U.S. cents for the currency. China is Australia’s largest trading partner.
The yuan weakened 0.1 percent and the cost of one-year interest-rate swaps, the fixed payment to receive the floating seven-day repurchase rate, fell four basis points, the most since Aug. 26, to 3.57 percent, according to data compiled by Bloomberg. The seven-day repurchase rate dropped seven basis points, or 0.07 percentage point, to 3.19 percent, according to a weighted average compiled by the National Interbank Funding Center.
“We continue to believe that the government will rely on further targeted easing measures rather than a broader policy easing to put a floor under the economy,” Frances Cheung and Dariusz Kowalczyk, Hong Kong-based analysts at Credit Agricole CIB, wrote in a note today.
Brent fell to $ 96.57 a barrel after settling at its lowest level since June 2012 amid concern global fuel consumption is slowing while output climbs. West Texas Intermediate crude sank 1.1 percent to $ 91.22 today, after slipping 0.6 percent Sept. 12. The International Energy Agency cut its global oil-demand forecast for 2015 last week.
Copper for three-month delivery on the London Metal Exchange fell to $ 6,780 a metric ton, following last week’s 2 percent retreat. Lead dropped 0.6 percent to $ 2,110 a ton and zinc slid 0.3 percent to $ 2,268.25.
Gold for immediate delivery increased 0.3 percent to $ 1,233.72 an ounce after closing last week at $ 1,229.65, the lowest since Jan. 9. Silver added 0.1 percent. Palladium climbed 0.6 percent to $ 842.50 an ounce.
U.S. Treasuries were untraded due to the holiday in Japan. The rate on notes due in a decade climbed a seventh day on Sept. 12, the longest slump for the bonds since June last year. The yield on 10-year Australian government notes climbed four basis points, or 0.04 percentage point, to 3.65 percent today.
The Fed, which meets Sept. 16-17, is considering the timing of rate increases and whether to revamp its public guidance on the path of rates. The central bank has said since March that interest rates would stay low for a “considerable time” after it completes a monthly bond-buying program that’s on track to end this year.
Sales at U.S. retailers climbed 0.6 percent in August, the fastest pace in four months, while another report showed consumer confidence rose more than estimated.
The krona weakened 0.4 percent to 9.2704 per euro today. The three-party Social Democratic opposition bloc won 43.6 percent of the vote in an election, versus 39.5 percent for the government’s coalition, with 97 percent of ballots counted. The Social Democrats must now garner support from other parties to form a majority.
Indonesia’s currency slid to 11,893 per dollar, the weakest since July 4.
India’s rupee slumped 0.7 percent to 61.0750 as Reserve Bank of India Governor Raghuram Rajan said economic data last week highlighted uneven growth and that the fight against inflation isn’t over. Industrial production growth slowed to 0.5 percent in July, from 3.4 percent a month earlier, a report showed after markets closed on Sept. 12.
Unprecedented stimulus by central banks and historically low volatility levels across asset classes have made it more likely that emerging markets destabilize, the Basel, Switzerland-based BIS said in its quarterly report. Yield-hungry investors investors to funneled money into higher-paying assets in emerging markets, swelling them by about 55 percent to $ 1.4 trillion in May compared with October 2007, the BIS said, citing data from Emerging Portfolio Fund Research Global.
To contact the editors responsible for this story: Nick Gentle at firstname.lastname@example.org Richard Frost
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