Bloomberg News

Asian Stocks Fall as Fed Official Says Rates May Rise

June 27, 2014

St. Louis Fed President James Bullard

James Bullard, president of the St. Louis Federal Reserve Bank. Bullard yesterday suggested that higher interest rates may happen sooner than people thought. Photographer: Jerome Favre/Bloomberg

Asian stocks fell, with the regional benchmark index paring its seventh straight weekly gain, as a Federal Reserve official said the U.S. may raise interest rates by March.

Samsung Electronics Co., South Korea’s largest exporter of consumer electronics, was the biggest drag on the regional index, falling 1.1 percent. Oracle Corp. Japan fell 5.1 percent, leading losses among information technology shares, after its operating-profit forecast missed estimates. Ono Pharmaceutical Co. jumped 5 percent in Tokyo, leading health-care shares higher, on a report its melanoma drug will be approved.

The MSCI Asia Pacific Index (MXAP) slid 0.3 percent to 145.04 as of 4:12 p.m. in Hong Kong, with nine of its 10 industry groups falling. The measure closed yesterday at its highest level since June 2008 and is heading for a 0.2 percent gain this week.

“It’s a timely warning that the time for the Fed to start raising interest rates is drawing nearer,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $160 billion. “I don’t think that risk is factored into the market sufficiently.”

Japan’s Topix (TPX) index slipped 0.8 percent as the yen strengthened against the dollar. A report today showed inflation accelerated at the fastest pace in 32 years, swelled by a sales-tax increase and higher utility charges. Consumer prices excluding fresh food rose 3.4 percent in May from a year earlier, the statistics bureau said, matching the median forecast in a Bloomberg News survey of economists.

Trading Halt

South Korea’s Kospi index fell 0.3 percent with Samsung dropping 1.1 percent to 1.311 million won. Australia’s S&P/ASX 200 Index lost 0.4 percent. New Zealand’s NZX 50 Index rose 0.3 percent, with the market resuming after a technical fault halted trading at NZX Ltd., operator of the country’s stock exchange.

Taiwan’s Taiex index lost 0.2 percent, while Singapore’s Straits Times Index slid 0.3 percent. Hong Kong’s Hang Seng Index added 0.1 percent. The Hang Seng China Enterprises Index of mainland stocks traded in the city retreated 0.3 percent, while the Shanghai Composite Index fell 0.1 percent. India’s S&P BSE Sensex Index rose 0.1 percent.

Alibaba Group Holding Ltd., China’s biggest e-commerce company, will list its shares on the New York Stock Exchange, according to a filing released yesterday, a blow to the Nasdaq Stock Market which was competing for what may be a record U.S. initial public offering.

Higher Rates

Futures on the Standard & Poor’s 500 Index dropped 0.1 percent today. The measure slid 0.1 percent yesterday after James Bullard, president of the Federal Reserve Bank of St. Louis, suggested that higher interest rates may happen sooner than people thought.

Bullard, speaking in an interview on Fox Business Network, predicted the central bank’s first interest-rate rise will happen in the first quarter of next year.

Economic data showing that U.S. consumer spending rose less than forecast also led to losses in stocks. Purchases, which account for about 70 percent of the economy, climbed 0.2 percent last month after being little changed in April, the Commerce Department reported. The median forecast in a Bloomberg survey of economists called for a 0.4 percent increase.

Oracle Japan declined 5.1 percent to 4,390 yen after forecasting its full-year operating profit will be 45 billion yen ($444 million), compared with the 47.7 billion yen median estimate of analysts.

Melanoma Treatment

Ono Pharmaceutical jumped 5 percent to 8,980 yen after public broadcaster NHK said Japan’s health ministry will approve its drug for melanoma treatment, saying the product may be distributed by year-end.

Standard Chartered Plc dropped 4.5 percent to HK$158.60 in Hong Kong after the U.K. bank that generates 58 percent of its revenue in the Asia-Pacific region said first-half profit probably fell 20 percent.

The MSCI Asia Pacific Index rose 5.4 percent this quarter as of yesterday. The measure traded at 13.4 times estimated earnings as of yesterday compared with 16.6 for the S&P 500 and 15.3 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net John McCluskey


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