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Monday, August 15, 2022

Asian Stocks Extend Rout as Shares Slide in Japan

Asian stocks tumbled, extending a global selloff, with Japanese and Hong Kongshares dragging the regional index toward its lowest close in five months. Australia’s currency surged as the country’s central bank held rates while Asian credit risk rose.

The MSCI Asia Pacific Index lost 2.6 percent by 1:41 p.m. in Tokyo, the most since June. Japan’s Topix index plunged as much as 4.4 percent and the Hang Seng Index slid 2.4 percent in Hong Kong.Standard & Poor’s 500 Index (SPX)futures rose 0.4 percent after the gauge sank the most since June in New York. The so-called Aussie climbed 1.5 percent while Asian credit risk rose to the highest in five months. Copper was little changed in London after earlier being on track for its longest losing streak in 28 years.

U.S. factory-orders data today will add to evidence of a slowdown in manufacturing in the world’s two largest economies, according to economists surveyed by Bloomberg. About $2.9 trillion has been wiped from global equities this year as slower Chinese growth, cuts to U.S. stimulus and unrest in emerging markets from Thailand to Ukraine spook investors. The Reserve Bank of Australia kept the cash rate target at a record low 2.5 percent, as predicted by 32 economists surveyed by Bloomberg.

“Investors should steer clear of risk assets over the short term as the turmoil does not look like it will be over anytime soon,” Mitul Kotecha, head of global markets research for Asia at Credit Agricole CIB wrote in an e-mailed note today. “A combination of tapering, a confluence of country-specific emerging-market country concerns and weaker growth in Chinaprovide the backdrop for a volatile few weeks.”

Lenovo Falls

About 11 companies fell for each that advanced on MSCI’s Asia-Pacific gauge, which is down 7.6 percent for the year. The Kospi Index in Seoul declined 1.7 percent to the lowest level since August, while Australia’s S&P/ASX 200 Index retreated 1.7 percent and is headed for a 1 1/2-month low.

Markets in mainland China, Taiwan and Vietnam remain closed for holidays today.

A measure of Chinese shares in Hong Kong lost 3.2 percent. Lenovo Group Ltd., the personal-computer maker which announced $5 billion of deals last month to bolster its server and smartphone businesses, fell the most since 2009 in Hong Kong after the stock was downgraded by at least five brokerages.

In Tokyo, only one stock advanced on the Nikkei 225 Stock Average (NKY), the least since March 2007. The Topix extended its drop from a December peak to more than 10 percent, meeting the definition of a correction. Toyota Motor Corp. (7203) to Sharp Corp. and Panasonic Corp. report results today in the busiest week for Japanese company earnings.

Factory Data

Measures of volatility surged across the region, with the Nikkei Stock Average Volatility Index at its highest since September and similar gauges in Hong Kong and Seoul at levels unseen since July. The Chicago Board Options Exchange Volatility Index, or VIX, for U.S. equities jumped 16 percent to 21.44 yesterday, the priciest since December 2012.

American factory output expanded in January at the weakest pace in eight months as orders slumped, with the Institute for Supply Management’s factory index dropping to 51.3 in January from 56.5 the prior month. Readings above 50 indicate expansion. The median forecast of 85 economists surveyed by Bloomberg called for a decline to 56. New orders slipped the most in five months in December, Census Bureau figures today will show.

The Australian dollar jumped the most since September after the central bank held rates in line with expectations. A period of stability in interest rates is the most prudent course at the moment, the Reserve Bank said, identifying reasonable prospects for a pickup in global growth.

The yen slid 0.3 percent from its strongest level versus the dollar in more than two months.

CDS, Copper

Asian credit risk is on track to close at the highest level since September, according to credit-default swap traders. Benchmark 10-year Japanese bonds rose to the highest since April. Yields on similar-maturity Australian government notes fell to 3.98 percent.

Copper futures traded at $7,036 a metric ton. Zinc fell 0.3 percent, declining for a 10th day, the longest run of losses since January 1989.

Rubber in Tokyo extended declines to a fourth day, falling as much as 2.3 percent to the lowest price since September 2012.

Natural gas snapped a three-day losing streak, gaining 1.6 percent in New York, as a winter storm spread across the U.S. Northeast, boosting demand for the heating fuel.


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