Asian stocks fell, with a regional benchmark index headed for its first loss in six days, as the Organization for Economic Cooperation and Development said failure to prevent the so-called fiscal cliff in the U.S. would increase the risk of a global recession.
Rio Tinto Group (RIO), the world’s second-biggest iron ore exporter, dropped 1.9 percent in Sydney, leading losses among companies with earnings closely tied to economic growth. Komatsu Ltd. (6301), which gets about a quarter of its sales in the U.S., fell 2.1 percent. Hulic Co. (3003) tumbled 12 percent after the Japanese real-estate operator said it plans a share sale.
The MSCI Asia Pacific Index slid 0.6 percent to 123.03 as of 7:29 p.m. in Tokyo, with about two stocks falling for each that rose. The gauge rose 13 percent from this year’s low on June 4 through yesterday as central banks added stimulus to spur growth and data showed a slowdown in China may be ending.
“Most investors are still cautious to bearish in terms of their outlook, and certainly in terms of their positioning,” said Markus Rosgen, chief Asian strategist at Citigroup Inc. in Hong Kong. “As far as the markets are concerned here in Asia, increasingly people feel less about Greece and more about the fiscal cliff.”
Japan’s Nikkei 225 Stock Average (NKY) fell 1.2 percent and South Korea’s Kospi Index lost 0.7 percent. Australia’s S&P/ASX 200 Index (AS51) slid 0.2 percent, the Shanghai Composite Index dropped 0.9 percent and Hong Kong’s Hang Seng slipped 0.6 percent. Singapore’s Straits Times Index was little changed, while Taiwan’s Taiex Index both rose less than 0.1 percent.
Futures on the Standard & Poor’s 500 Index slid 0.1 percent today. The S&P 500 declined for a second day yesterday, losing 0.5 percent, as concern about progress in Washington budget negotiations overshadowed a European agreement on aid for indebted Greece and a better-than-forecast report on U.S. durable goods.
As the administration of President Barack Obama prepares to negotiate a budget agreement with Republicans in Congress, the OECD urged “smooth” implementation of tax increases, spending curbs and a higher debt ceiling in the medium term.
“If the fiscal cliff is not avoided, a large negative shock could bring the U.S. and the global economy into recession,” the Paris-based OECD said in its Economic Outlook report released yesterday.
Senate Majority Leader Harry Reid said that following a Nov. 16 White House meeting, Republicans backed away from earlier openness to considering new tax revenue as part of a year-end deal to avert $607 billion in tax increases and spending reductions set to begin in January, known as the fiscal cliff.
Miner Rio Tinto lost 1.9 percent to A$56.70 in Sydney, while Aluminum Corp. of China Ltd., the nation’s biggest producer of the metal, slid 1.5 percent to HK$3.26 in Hong Kong. Copper prices in London fell for the first time in five days. Raw-materials shares posted the largest decline among 10 industry groups on the MSCI Asia Pacific index.
Exporters retreated. Komatsu, the world’s second-largest maker of construction and mining equipment, slid 2.1 percent to 1,805 yen in Tokyo. Li & Fung Ltd. (494), a supplier of toys and clothes to Wal-Mart Stores Inc., retreated 0.5 percent to HK$12.34 in Hong Kong. Wal-Mart, the world’s largest retailer, fired a supplier that made apparel at a Bangladesh factory where more than 100 people died in the country’s deadliest ever blaze at a garment facility.
Hulic slumped 12 percent to 571 yen in Tokyo after the real-estate company said it will raise as much as 37 billion yen ($415 million) selling shares.
Japanese shippers fell after Kawasaki Kisen Kaisha Ltd., Japan’s third-largest shipping company, said it will postpone an expansion of its commodity-vessel fleet due to a global glut cutting cargo rates. Kawasaki Kisen lost 4.6 percent to 103 yen, Nippon Yusen K.K., the biggest, dropped 4.5 percent to 169 yen and Mitsui O.S.K. Lines Ltd. (9104) declined 4.9 percent to 196 yen.
Guangzhou R&F Properties Ltd., a property company in the southern Chinese city, rose 6 percent to HK$11.64 after Deutsche Bank AG said the company is among its top picks.
The MSCI Asia Pacific (MXAP) traded at 13.9 times estimated earnings, compared with 13.5 times for the S&P 500 Index and 12.4 times for the Stoxx Europe 600 Index.
Trading volumes in Hong Kong and Japan were 12 percent and 7.5 percent respectively below the 30-day average, according to data compiled by Bloomberg.
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