Most Asian Stocks Dip as Australia Raises Rate; Yen Retreats
Nov. 2 (Bloomberg) -- Most Asian stocks fell after Australia unexpectedly raised its interest rate before central bank meetings in the U.S., Japan and India. The yen declined from a 15-year high.
The MSCI Asia Pacific Index climbed 0.2 percent to 130.60 as of 1:21 p.m. in Tokyo, with five stocks down for every four that rose. Futures on the Standard & Poor's 500 index were little changed while the yen weakened versus 15 of its 16 major counterparts. Cotton climbed to a record.
The Reserve Bank of Australia increased its benchmark rate today on concern stronger economic growth will fuel inflation. The Bank of Japan meets Nov. 5, the U.S. Federal Reserve's rate decision is expected tomorrow while India sets its rate later today. The Fed will probably begin a new round of unconventional monetary easing this week by announcing a plan to buy at least $500 billion of long-term securities, according to economists surveyed by Bloomberg News.
"The wait-and-see mood is evident ahead of the major events," said Park Young Yeol, a fund manager at ING Investment Management Korea Ltd., which manages $16 billion in assets. "Investors are reluctant to make decisive directions in their bets before they get the sense of the magnitude of the Fed's measures."
Japan's Nikkei 225 Stock Average dropped 0.2 percent while Australia's S&P/ASX 200 Index lost 0.1 percent. A total of 520 stocks dropped on the MSCI Asia Pacific index, while 382 gained.
Japanese Exporters Fall
Elpida Memory Inc. and Honda Motor Co. slid at least 2.4 percent, leading Japanese exporters lower on concern a stronger yen will hurt the value of overseas sales. Newcrest Mining Ltd., Australia's biggest gold producer, retreated 1.5 percent as the metal's price fell.
The yen fell to 112.10 yen per euro in Tokyo from 111.85 in New York yesterday. It was at 80.52 yen per dollar from 80.51 yesterday, when it reached 80.22, the highest since April 1995.
"Domestic demand growth in Asia is helping the global economy chug along," said Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney. "Most are bullish on a rise in non-Japan Asian currencies."
Australia's dollar climbed 1.1 percent to 80.37 yen and advanced 1.1 percent to 99.83 U.S. cents. Reserve Bank of Australia Governor Glenn Stevens and his board raised the overnight cash rate target by a quarter percentage point to 4.75 percent in Sydney today, the first move in six months.
Cotton on ICE Futures U.S. climbed 1 percent to a record on concern that global demand will outstrip supply after colder temperatures and rains hurt crops in China, the biggest consumer and importer. Futures for December delivery advanced to $1.306 a pound, before trading at $1.2993.
Japan's Policy Meeting
The Bank of Japan said last week that policy makers advanced their next session to Nov. 4-5, following a meeting by the Fed on Nov. 2-3. Japanese markets are closed tomorrow for a public holiday.
U.S. policy makers will restart a program of securities purchases to spur growth, reduce unemployment and increase inflation, said 53 of 56 economists surveyed last week. Twenty-nine estimated the Fed will pledge to buy $500 billion or more, while another seven predicted $50 billion to $100 billion in monthly purchases without a specified total.
Bank of Japan board members also said purchases of exchange-traded funds and real-estate investment trusts could increase transactions by supporting investor sentiment, minutes of the bank's Oct. 4-5 board meeting show.
India's inflation rate remains above "comfort level" even after five interest-rate increases this year, the central bank said, signaling the need for higher borrowing costs before its monetary policy decision at 11:30 a.m. in Mumbai.
To contact the reporters on this story: Linus Chua in at lchua@bloomberg.net Saeromi Shin in Seoul at sshin15@bloomberg.net
To contact the editor responsible for this story: Patrick Chu in Tokyo at pachu@bloomberg.net
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