Asia Stocks Drop, Erasing This Year’s Gain, on Economic Outlook
May 06, 2011, 6:44 AM EDTBy Jonathan Burgos
May 6 (Bloomberg) -- Asian stocks declined, with the regional benchmark index erasing gains for the year, as rising jobless claims and declining consumer confidence in the U.S. stoked concern the recovery in world’s biggest economy is weakening.
Toyota Motor Corp., the world’s largest carmaker, and Canon Inc., a camera maker that gets more than 80 percent of its revenue overseas, declined at least 2.3 percent. Mitsui & Co., a Japanese commodities trader, sank 3 percent after reporting earnings that missed estimates. BHP Billiton Ltd., Australia’s No.1 oil producer and the world’s biggest mining company, fell 1.9 percent as crude and copper futures extended losses yesterday.
The MSCI Asia Pacific Index declined 0.9 percent to 137.54 as of 7:39 p.m. in Tokyo, set for its biggest drop since April 19. About three stocks fell for every two that rose. The measure is heading for a 1.5 percent decline this week after central banks from India to the Philippines raised interest rates and U.S. reports showed companies added fewer jobs than estimated in April and service industries expanded at the slowest pace in eight months.
“Risk aversion is increasing as we’re still seeing a very fragile global economic recovery,” said Shane Oliver, head of investment strategy at AMP Capital Investors Ltd., which manages $98 billion in Sydney. “We’re going through a patch of softer economic data in the U.S. Investors are unwinding their long positions in commodities as monetary tightening occurs across Asia.”
SARS, Iraq War
Japan’s Nikkei 225 Stock Average sank 1.5 percent when the market resumed trading after a three-day holiday. South Korea’s Kospi Index declined 1.5 percent. Australia’s S&P/ASX 200 Index lost 0.2. China’s Shanghai Composite Index fell 0.3 percent.
Hong Kong’s Hang Seng Index lost 0.4 percent, an eighth day of decline. That’s the gauge’s longest losing streak since April 2003, when the city was in the grips of the severe acute respiratory syndrome, or SARS, epidemic and the U.S. was preparing to invade Iraq.
Futures on the Standard & Poor’s 500 Index fell 0.3 percent today. In New York, the index dropped for a fourth day, falling 0.9 percent to 1,335.10 yesterday as shares of energy and raw- material companies slumped following the biggest plunge in commodities in almost two years and as more Americans unexpectedly filed first-time claims for unemployment.
Applications for jobless benefits surprisingly jumped by 43,000 to 474,000 in the week ended April 30, the most since August, Labor Department figures showed yesterday.
‘Waning Optimism’
Also, U.S. consumer confidence dropped last week to the lowest level in more than a month as rising fuel costs squeezed American household budgets. The Bloomberg Consumer Comfort Index decreased to minus 46.2 in the week ended May 1, the lowest level since the end of March, from minus 45.1 the prior period.
“Investors’ optimism toward the U.S. economy is waning,” said Juichi Wako, a senior strategist at Nomura Holdings Inc. in Tokyo.
Gauges of consumer discretionary companies, including automakers and electronics manufacturers, as well as energy and raw material producers led the decline among the 10 industry groups in the MSCI Asia Pacific Index. All but two of the sub- indexes fell.
Toyota dropped 2.4 percent to 3,210 yen in Tokyo. Canon, the world’s biggest camera maker, declined 2.3 percent to 3,805 yen. Samsung Electronics Co., the world’s largest maker of televisions and flat-screen panels, lost 1.8 percent to 899,000 won in Seoul.
Asian Earnings
Honda Motor Co., the Japanese carmaker that gets 44 percent of sales from North America, slumped 4.7 percent to 3,075 yen. The stock also declined after the National Business Daily reported Honda’s parts unit in China halted production after the March 11 Japan earthquake disrupted supplies.
Mitsui, Japan’s second biggest commodities trader by sales, decreased 3 percent to 1,412 yen. The company said full-year net income more than doubled to 367.9 billion yen ($4.6 billion). That missed the average estimate of 378.1 billion yen by 18 analysts compiled by Bloomberg and the company’s own forecast of 370 billion yen.
United Overseas Bank Ltd., Singapore’s third-largest lender, lost 1.6 percent to S$18.80 after reporting first-quarter profit tumbled 13 percent as income from lending, trading and investment fell.
The MSCI Asia Pacific Index increased 0.8 percent this year through yesterday, compared with gains of 6.2 percent by the S&P 500 and 0.7 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13.4 times estimated earnings on average, compared with 13.5 times for the S&P 500 and 11.2 times for the Stoxx 600.
Commodities Drop
About 39 percent of the 376 companies on the Asian benchmark index that reported earnings since April 11 beat analysts’ estimates. That compares with 61 percent for the MSCI World Index of developed stock markets.
Commodities dropped the most in almost two years, paring this year’s gains to 8.2 percent, on concern that economic growth will slow as central banks seek to cool inflation by raising borrowing costs.
BHP Billiton decreased 1.9 percent to A$44.58 in Sydney. Rio Tinto Group, the world’s second-biggest miner by sales, slipped 1.9 percent to A$79.57. Jiangxi Copper Co., China’s No. 1 producer of the metal, sank 2.2 percent to HK$24.10 in Hong Kong. Cnooc Ltd., a Chinese offshore oil producer, dropped 2.3 percent to HK$17.98. Inpex Corp., Japan’s largest energy explorer, plunged 6.2 percent to 563,000 yen in Tokyo.
Transport Companies
Crude oil for June delivery plunged 8.6 percent to $99.80 a barrel yesterday, the lowest settlement in New York since March 16. The London Metal Exchange Index of six metals including copper and aluminum sank for a second day, falling 4 percent yesterday, the biggest drop since November 16.
Shipping companies and airlines advanced on speculation fuel costs will decline even as crude oil futures climbed today from the lowest level in almost two months.
Hyundai Merchant Marine Co., a South Korean shipping line, gained 1.9 percent to 34,150 won in Seoul. China Cosco Holdings Co., Asia’s largest shipping line by market value, climbed 2.1 percent to HK$7.26 in Hong Kong. Air China Ltd., the world’s biggest carrier by market value, advanced 5.8 percent to HK$8.39. Smaller rival Singapore Airlines Ltd. rose 2.6 percent to S$14.38.
Tokyo Electric Power Co., owner of the Fukushima Dai-Ichi nuclear plant crippled by the March 11 earthquake and tsunami, soared 6.8 percent to 455 yen in Tokyo, the biggest gain in the in the Nikkei 225 after Asahi newspaper reported on May 3 the government estimated that total damages to be paid to victims of the disaster would amount to 4 trillion yen ($50 billion).
The total may include about 2 trillion yen by Tokyo Electric, which is expected to raise electricity prices to help pay for compensation, the report said. Japan’s Chief Cabinet Secretary Yukio Edano today said the Cabinet hasn’t discussed allowing the utility to increase electricity fees to help pay compensation from the accident at the nuclear plant.
--With assistance from Norie Kuboyama and Satoshi Kawano in Tokyo. Editors: Nick Gentle, John McCluskey.
To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net.
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.
