Asian Stocks Slip, Dollar Gains on Fed Speculation; Oil Falls
Oct. 18 (Bloomberg) -- Asian stocks slumped after reaching their highest since July 2008 and the dollar strengthened on speculation that the Federal Reserve may add less monetary stimulus than some expect. Oil dropped a third day, the worst run in a month, while gold and metals also declined.
The MSCI Asia Pacific Index fell 0.3 percent to 130.66 at 12:28 p.m. in Tokyo. Losing shares in the index beating gainers 468 to 396. Standard & Poor's 500 index futures slid 0.6 percent. Oil for November delivery lost 0.7 percent to $80.72 a barrel.
Federal Reserve Chairman Ben S. Bernanke said on Oct. 15 that the U.S. central bank may expand asset purchases to sustain the recovery in the world's largest economy, hurting the dollar last week. The U.S. currency advanced today against all its major counterparts except the yen.
"Investors are in a wait-and-see mood as they look to see what's coming in the way of policy stimulus in the U.S. and elsewhere," said Stephen Halmarick, who helps manage about $135 billion as head of investment markets research at Colonial First State Global Asset Management in Sydney. "The data is mixed."
The MSCI Asia declined for a second day after peaking on Oct. 14 at 132.42. The Hang Seng Index fell 0.8 percent. Equity benchmarks in Australia, Taiwan and South Korea also dropped.
In Sydney, BHP Billiton Ltd. slipped 1.2 percent after abandoning a plan with Rio Tinto Group to create the world's largest iron-ore exporter, following opposition from regulators in Europe and Asia. Rio retreated 0.2 percent.
HSBC Holdings
HSBC Holdings Plc led banks lower in Hong Kong, dropping as much as 2.2 percent.
"In a volatile market funds tend to make their way into the financial sector so once a correction takes place, money pulls out first from this sector," said Castor Pang, research director at Cinda International Holdings Ltd.
The yen rose against all 16 of its major peers on speculation Japan will refrain from intervening to weaken its currency ahead of this week's meeting policy makers from Group of 20 nations. The yen traded at 81.37 per dollar in Tokyo from 81.45 in New York on Oct. 15 when it touched 80.88, the strongest level since April 1995 and near its post-World War II high of 97.75 yen.
Oil declined for a third day in New York as the dollar gained against the euro, curbing the appeal of commodities as an alternative investment. The November contract dropped on the New York Mercantile Exchange, the longest pullback since a four-day drop through Sept. 17.
Gold Falls
Gold for immediate delivery fell for a second day after reaching a record last week, the first two-day drop in more than a month. The precious metal, which typically trades inversely to the dollar, declined as much as 0.9 percent to $1,356.41 an ounce.
Industrial metals declined as the dollar rallied. Nickel for three-month delivery dropped for a third day on the London Metal Exchange, tumbling as much as 1.3 percent to $23,725 a metric ton, while copper lost as much as 0.6 percent to $8,351 a ton. Zinc, tin, aluminum and lead also fell.
The cost of protecting Asia-Pacific corporate and sovereign bonds from non-payment rose, according to traders of credit- default swaps. The Markit iTraxx Asia index of 50 investment- grade borrowers outside Japan increased two basis points to 105 basis points.
To contact the reporter for this story: Jake Lloyd-Smith in Singapore at jlloydsmith@bloomberg.net
To contact the editor responsible for this story: Patrick Chu in Tokyo at pachu@bloomberg.net
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