Asian stocks fell for sixth day
Asian stocks fell for a sixth day, led by finance and mining companies, as an unexpected drop in Japanese machinery orders fanned concern a global economic recovery will falter.
Mitsubishi UFJ Financial Group Inc., Japan’s biggest publicly traded bank, sank 3.2 percent after lending in the nation slowed. BHP Billiton Ltd., the world’s largest mining company, lost 2.3 percent in Sydney as oil and copper prices headed for their longest losing streaks since December. Honda Motor Co., which gets 45 percent of its sales in North America, slumped 4.7 percent in Tokyo on concern a stronger yen will hurt the value of overseas revenue.
“The market is finally returning its focus to the present, rather than looking for an eventual recovery,” said Masaru Hamasaki, a Tokyo-based strategist at Toyota Asset Management Co., which oversees $14 billion. “The economic rebound won’t be rapid. Share prices are beginning to reflect that.”
The MSCI Asia Pacific Index dropped 1.8 percent to 99.98 at 12:41 p.m. in Tokyo, taking its six-day decline to 3.1 percent. That’s the longest losing streak since September, when the credit crisis caused the collapse of Lehman Brothers Holding Inc. The measure had surged as much as 49 percent since closing at a five-year low on March 9.
Japan’s Nikkei 225 Stock Average fell 2.2 percent. Tokyo Electron Ltd., the world’s second-largest maker of semiconductor equipment, sank 5.2 percent on a Credit Suisse Group AG downgrade and as researcher Gartner Inc. predicted spending on information technology will drop.
Hong Kong’s Hang Seng Index lost 2 percent, while South Korea’s Kospi Index dropped 1.3 percent. Australia’s S&P/ASX 200 Index declined 1.1 percent, almost erasing this year’s gains. Indonesia’s stock market is closed for presidential elections.
Futures on the Standard & Poor’s 500 Index fell 0.3 percent. The gauge dropped 2 percent to the lowest level since May 1, amid concern second-quarter earnings will fail to justify a four-month rally in equities.
Alcoa Inc. will kick off the U.S. earnings season today as the first company in the Dow Jones Industrial Average to report results. Analysts estimate profits fell an average 34 percent at S&P 500 companies in the second quarter and will decrease 21 percent from July through September, according to data compiled by Bloomberg.
Confidence stimulus policies worldwide will succeed in reviving global growth has fueled the MSCI Asia Pacific Index’s rally since March, lifting the average valuation of companies in the gauge to 1.5 times the net value of assets. That’s the highest level since September.
Disappointing economic data, including worse-than-expected U.S. unemployment figures on July 2, has fanned investor concern that stock gains had outpaced prospects for an economic recovery. Japan’s government said today that machinery orders declined 3 percent in May. Economists had estimated a 2 percent increase.
“The rally was built on recovery hopes, but a gap has developed between the level of the market and the real outlook for the economy,” said Hiroichi Nishi, general manager at Tokyo-based Nikko Cordial Securities Co. “All eyes are on the earnings about to kick off and the direction they will take.”
Mitsubishi UFJ slumped 3.2 percent to 570 yen as Japanese lending growth slowed in June for a sixth-straight month. Mizuho Financial Group Inc., Japan’s second-largest bank, sank 1.9 percent to 212 yen.
Loans, excluding those by credit associations, rose 2.5 percent last month from a year earlier, compared with 3.3 percent growth in May, the Bank of Japan said today.
Copper, Oil Prices
Shares of financial companies also fell as the cost of protecting Asia-Pacific corporate and sovereign bonds from default jumped, according to traders of credit-default swaps.
BHP lost 2.3 percent to A$31.51. Copper for delivery in three months on the London Metal Exchange fell as much as 0.6 percent today, the fifth day of declines. Rio Tinto Group, the world’s No. 3 mining company, dropped 1.6 percent to A$46.61.
PetroChina Co., China’s largest oil producer, sank 2.3 percent to HK$7.98 in Hong Kong. Woodside Petroleum Ltd., Australia’s No. 2 oil company, dropped 1.8 percent to A$39.73. Crude oil futures in New York lost 1.2 percent today, set for a sixth day of declines.
Honda lost 4.7 percent to 2,410 yen as the yen climbed to 94.50 per dollar, the strongest since June 1. A stronger yen reduces income when overseas revenue is converted into local currency. Toyota Motor Corp., the world’s largest automaker, lost 3.1 percent to 3,480 yen.
Tokyo Electron retreated 5.2 percent to 4,340 yen after being cut to “underperform” from “neutral” at Credit Suisse Group AG. The brokerage cut its stance on Japan’s semiconductor production equipment industry to “market weight” from “overweight,” citing a weaker outlook for capital spending.
Dainippon Screen Manufacturing Co., a chip-equipment maker that was also cut to “underperform” by Credit Suisse, tumbled 8.3 percent to 264 yen.
Separately, Gartner predicted technology spending will drop 6 percent this year, worse than the 3.8 percent decrease it predicted in March.
While the global recession shows signs of easing, Gartner said in an e-mail that “IT budgets are still being cut and consumers will need a lot more persuading before they can feel confident enough to loosen their purse strings.”