Asian stocks fell, paring the first weekly advance in six weeks, amid concern that central banks are struggling to reinforce global demand amid Europe’s worsening debt crisis.
Sony Corp. (6758), Japan’s No. 1 exporter of consumer electronics, slid 5.1 percent. BHP Billiton Ltd. (BHP), the world’s largest mining company, gained 1.2 percent in Sydney after China cut its benchmark interest rate for the first time since 2008 and metals prices climbed. Renesas Electronics Corp. (6723) soared as much as 19 percent on a report the maker of automotive microcontrollers was scrapping a share sale.
The MSCI Asia-Pacific (MXAP) slid 1.5 percent to 111.63 as of 6:30 p.m. in Hong Kong, snapping three days of gains and paring its gain this week to 0.2 percent. Three stocks fell for every one that gained. The gauge dropped 13 percent from its peak this year on Feb. 29. through yesterday amid concern growth is slowing in China and the U.S. and as Spain tries to overcome German opposition to allow the use of regional bailout funds to recapitalize lenders directly.
“The key issue really is around European sovereign debt and having some permanent resolution,” said Donald Williams, chief investment officer at Platypus Asset Management Ltd. that manages about $1 billion. “Even though China’s rate cut was unexpected, people are selling because it confirms in their minds that the growth outlook is problematic. Europeans have to come up with a structure that’s going to underwrite the balance sheets of countries that are in a trouble.”
Federal Reserve Chairman Ben S. Bernanke refrained yesterday from discussing any stimulus action the central bank might take to boost economic expansion in the U.S. On the same day, China cut borrowing costs for the first time since 2008 and loosened controls on banks’ lending and deposit rates, stepping up efforts to combat a deepening slowdown as Europe’s debt crisis threatens global growth.
Japan’s Nikkei 225 (NKY) lost 2 percent. South Korea’s Kospi Index slid 0.6 percent as the Bank of Korea held off from altering borrowing costs for a 12th straight month. Australia’s S&P/ASX 200 Index retreated 1.1 percent.
Hong Kong’s Hang Seng Index retreated 0.9 percent and China’s Shanghai Composite Index was little changed.
China’s rate cut comes ahead of data on industrial production, inflation and trade due to be released this weekend.
“The timing of the cut may suggest that macro data in May could be worse than the market had expected,” Lu Ting, Hong Kong-based head of economics for greater China at Bank of America Corp., wrote in a report. “Despite cuts of growth forecasts since mid-May, market consensus might still be too high.”
Futures on the Standard & Poor’s 500 Index fell 0.5 percent today. The gauge closed little changed yesterday, paring earlier gains as Bernanke said the central bank will assess the U.S. economy before deciding if more stimulus is needed and after a report that Greece’s upcoming election could be derailed.
In Spain, Prime Minister Mariano Rajoy said he’s talking to his European peers about how to shore up the country’s banks as Fitch Ratings cut Spain’s credit grade to within two steps of junk.
The MSCI Asia-Pacific fell 0.7 percent this year through yesterday, compared with a 0.8 percent drop on the Stoxx Europe 600 Index and a 4.6 percent gain on the S&P 500. Declines in regional equity markets cut the average price of stocks on the Asian benchmark to 11.5 times estimated earnings. That compares with 12.6 times for the S&P 500 and a multiple of 10.1 for the Stoxx 600.
Exporters to the U.S. fell. Mazda Motor Corp. (7261), an automaker that gets 28 percent of its sales in North America slid 3.9 percent to 98 yen in Tokyo. Dainippon Sumitomo Pharma Co., a Japanese drug maker that gets 31 percent of its sales in the U.S., dropped 2.5 percent to 751 yen. Li & Fung Ltd., the world’s largest supplier of clothes and toys to retailers that makes makes more than half its sales in the U.S., slid 2.9 percent to HK$14.32 in Hong Kong.
Companies that do business in Europe fell. Sony lost 5.1 percent to 1,017 yen in Tokyo. Nippon Sheet Glass Co., the company on the Nikkei 225 with the highest percentage of revenue generated in Europe, slumped 4.8 percent to 80 yen. Hutchison Whampoa Ltd. (13), an operator of retail chains that gets 55 percent of sales in Europe, lost 1.3 percent to HK$62.80 in Hong Kong.
BHP Billiton climbed 1.2 percent to A$31.95 in Sydney. Hyundai Steel Co., South Korea’s second-biggest steelmaker, advanced 3.1 percent to 863,000 won.
The London Metal Exchange Index (LMEX) of prices for six industrial metals including copper and aluminum gained 1.2 percent yesterday.
Renesas Electronics rose 14 percent to 304 yen after the Mainichi newspaper said the company shelved plans to sell 100 billion yen ($1.3 billion) in shares.
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