Asian Stocks Extend Global Drop as Australian Bonds Rise
Bloomberg News
Asian stocks dropped, extending a global selloff, and oil dropped amid concern that the global economic outlook is worsening. Treasuries fell and Standard & Poor's 500 Index futures rose with the dollar before the Federal Reserve releases minutes of its last meeting.
The MSCI Asia Pacific Index fell 1.1 percent by 12:49 p.m. in Tokyo, as Japan's Topix (TPX) index dropped toward a seven-week low. The Shanghai Composite Index added 0.3 percent and China's yuan was little changed after a week-long holiday. S&P 500 futures rose 0.2 percent after the U.S. gauge's lowest close in almost two months. Ten-year Treasury yields rose two basis points after tumbling yesterday and the dollar gained against most peers. Gold rose 0.3 percent while Brent crude was near a two-year low.
The Federal Reserve releases minutes of its last meeting as Alcoa Inc. will report earnings amid reduced estimates for profit growth at U.S. companies. A gauge of China's services industries fell as markets there reopened after being closed for a holiday since Oct. 1. European Union leaders meet in Milan today to discuss fiscal policies after the IMF cut its global growth forecast yesterday and warned about risks posed by geopolitical tensions and 'frothy' stock markets.
'The global economic recovery has proved yet again to be fragile and uneven,' Shane Oliver, a global strategist at AMP Capital Investors Ltd., which oversees about $131 billion, said by e-mail in Sydney. 'The rough patch we have seen in shares lately could go a bit further.'
The Topix slipped 1.5 percent, set for the lowest close since Aug. 18, as the Nikkei 225 Stock Average retreated 1.4 percent. The yen, regarded as a haven by some investors, dropped 0.3 percent to 108.37 per dollar after gaining 1.6 percent over the past two days.
South Korea's Kospi index was little changed and the S&P/ASX 200 Index in Sydney lost 0.9 percent.
Hong Kong
Hong Kong's Hang Seng Index retreated 0.7 percent as the Hang Seng China Enterprises Index declined 0.9 percent. The enterprises gauge, which tracks mainland Chinese stocks listed in the city, gained 1.5 percent in its three trading days since Sept. 30, with pro-democracy protest leaders agreeing to start talks with the government Oct. 10, even as blockades remained on Hong Kong's streets.
The MSCI All Country World Index dropped 1.9 percent while China's markets were closed. The HSBC Holdings Plc/Markit Economics China services purchasing managers index fell to 53.5 in September from 54.1 a month before. An official non-manufacturing gauge for the country released Oct. 3 dropped to 54 for September from 54.4 in August.
IMF Report
Growth in the U.S. is helping lead a worldwide acceleration that's weaker than the IMF predicted 2 1/2 months ago, the Washington-based lender said yesterday as cut its growth outlook to 3.8 percent for 2015, from 4 percent. Some financial markets may be overheating after a sustained period of near-zero rates, according to the report.
'Downside risks related to an equity price correction in 2014 have also risen, consistent with the notion that some valuations could be frothy,' the IMF said without naming specific markets.
The S&P 500 dropped 1.5 percent yesterday, while the Nasdaq Composite Index slid 1.6 percent. The Russell 2000 Index of smaller companies lost 1.7 percent yesterday, the most since July 31. The Dow Jones Industrial Average slid 1.6 percent, also the steepest one-day loss since July.
The MSCI All-Country World Index declined 0.2 percent today after sinking 1 percent last session to its lowest level since April 15. A gauge of emerging-market equities sank 0.5 percent. Shares in Jakarta declined, with the benchmark index there dropping 0.8 percent.
Alcoa Profit
Profit at companies in the S&P 500 rose 4.9 percent in the July-September period, according to the average estimate of analysts in a Bloomberg survey. That's down from a 5.1 percent growth prediction in a survey published Sept. 26.
Alcoa, the largest aluminum producer in the U.S., reports its third-quarter results today, with results from Citigroup Inc. and JPMorgan Chase & Co. due later in the week.
Yields on 10-year U.S. Treasuries rose two basis points, or 0.02 percentage point, to 2.36 percent after sliding eight basis points yesterday. Thirty-year Treasury (USGG30YR) yields added two basis points to 3.06 percent after falling eight basis points to the lowest level since May, 2013.
The Federal Open Market Committee is due to release minutes of its Sept. 16-17 meeting later today. Investors have been concerned the central bank may increase interest rates sooner than anticipated as the U.S. economy gains strength.
Forecasts for the Fed to raise key rates in mid-2015 are 'reasonable' as policy makers wait for unemployment to fall further and inflation to accelerate, New York Fed President William C. Dudley said in a speech in Troy, New York.
Brent Slides
Brent crude lost 0.7 percent to $91.50 a barrel after sinking 0.7 percent to $92.11 a barrel yesterday, the lowest settlement price since June 2012. West Texas Intermediate crude slipped 1 percent to $87.93 a barrel -- a 17-month low -- after sinking 1.7 percent yesterday to $88.85.
Crude inventories probably expanded by 2 million barrels in the U.S. last week, according to a Bloomberg survey of analysts before data from the Energy Information Administration due today. The EIA, the Energy Department's statistical arm, cut its price forecasts in a monthly report yesterday, citing increased output and reduced demand.
Gold climbed to $1,212.54 an ounce after rising 0.1 percent yesterday. Platinum for immediate delivery climbed 0.4 percent to $1,264 an ounce in a third straight day of gains.
To contact the reporters on this story: Emma O'Brien in Wellington at eobrien6@bloomberg.net; Nick Gentle in Hong Kong at ngentle2@bloomberg.net
To contact the editors responsible for this story: Emma O'Brien at eobrien6@bloomberg.net; Nick Gentle at ngentle2@bloomberg.net Nick Gentle
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