Asian stocks fell, dragging the
region’s benchmark index toward its biggest weekly loss since
August, and currencies in the region dropped as unrest in the
Middle East spread, U.S. jobless claims rose and an earthquake
struck Japan.
The MSCI Asia Pacific Index dropped 1.7 percent to 133.87
as of 4:36 p.m. in Tokyo, with losses accelerating after the
quake rocked buildings in Japan’s financial center and a tsunami
as high as 10 meters was reported in northern Japan. Futures on
the Euro Stoxx 50 Index fell 1 percent. Standard & Poor’s 500
Index futures slipped 0.5 percent after the gauge sank to the
lowest level since January after the jobs data and ahead of a
retail-sales report today.
The quake struck at 2:46 p.m. local time 130 kilometers (81
miles) off the coast of Sendai north of Tokyo, at a depth of 24
kilometers, according to the U.S. Geological Service. A tsunami
inundated several towns on the northeast coast. Separately,
Muammar Qaddafi’s son said Libyan government forces are mounting
a full-scale attack on rebels, while Saudi Arabia said security
forces broke up a protest, a day before what anti-government
demonstrators have called a “Day of Rage.”
“The Japan earthquakes added another uncertainty to
markets that were already plagued with turmoil in the Middle
East and European debt concerns,” said Kang Shin Woo, chief
investment officer at Seoul-based Korea Investment Management
Co., which manages $17 billion. “This could raise concern for
the Japanese economy that has showed some signs of recovery.”
More than eight stocks dropped for each that gained and all
10 industry groups declined on the MSCI Asia Pacific Index,
which is headed for an almost three-month low and its biggest
weekly loss since August. China’s Shanghai Composite Index
dropped 0.8 as a report showed that consumer prices rose 4.9
percent in February from a year earlier, exceeding the
government’s 2011 target for a fifth month.
Nikkei Futures
Nikkei 225 Stock Average futures traded in Singapore lost
as much as 3.8 percent after the close of Tokyo share trading.
The yen fell versus all 16 of its most-traded counterparts
after the 8.8 magnitude temblor struck northeast of Tokyo.
Japan’s Nikkei 225 Stock Average accelerated losses, closing
down 1.7 percent.
“The quake and fires in Tokyo only added to the regional
bearish sentiment, sending the Nikkei into a tailspin for the
close as Tokyo Brokers canceled orders and staff left
buildings,” said Gavin Parry, managing director of Parry
International Trading Ltd in Hong Kong. “It’s even more
uncertainty that could weigh on markets.”
Toyota, Honda
Honda Motor Co., the Japanese carmaker that gets about 44
percent of sales in North America, and Toyota Motor Corp., the
world’s biggest automaker, dropped at least 1.5 percent in
Tokyo. BHP Billiton Ltd., the world’s largest mining company
declined 1 percent in Sydney.
The MSCI Emerging Markets Index’s decline accelerated after
the quake, falling as much as 1 percent. India’s Bombay Stock
Exchange Sensitive Index sank 1.3 percent and China’s Shanghai
Composite Index lost 0.8 percent.
The S&P 500 retreated 1.9 percent yesterday following the
increase in jobless claims, a wider American trade deficit and a
slowdown in China’s export growth. The Labor Department said
applications for first-time unemployment benefits rose by 26,000
to 397,000 in the week ended March 5. Economists forecast claims
would climb to 376,000, according to the median estimate in a
Bloomberg News survey.
Separately, the Commerce Department said the trade deficit
in goods and services rose 15 percent to $46.3 billion in
January as a surge in imports led by costlier oil overshadowed
record exports.
U.S. Data
Today’s report will show retail sales climbed by the most
in four months, according to the median forecast of economists
surveyed by Bloomberg News ahead of Commerce Department figures.
Separately, European leaders are due to meet today having set a
March 25 deadline to approve a “comprehensive” package of
measures to end the sovereign-debt crisis.
Data today may show U.S. consumer sentiment worsened this
month. The Thomson Reuters/University of Michigan preliminary
March index of consumer sentiment dropped to 76.3 from 77.5 in
February, according to the median estimate of economists in a
Bloomberg News survey.
“It seems there is a re-assessment of risk in light of
events like the Middle East civil unrest, European sovereign
debt issues and issues to do with the Chinese economy,” said Tim Schroeders, who helps manage $1 billion at Pengana Capital
Ltd. in Melbourne. Investors are waiting for a clearer way
forward before committing to greater risk taking.’’
Wheat Declines
Wheat for May delivery fell 0.3 percent to $7.38½ per
bushel, and headed for a weekly decline of 11 percent, the worst
performance for the most active contract since December 2008.
Copper in London dropped as much as 0.7 percent to $9,130 a
metric ton today, reversing a gain of as much as 0.9 percent,
and is set for a weekly loss of 7.1 percent, the worst
performance since June. The Thomson Reuters/Jefferies CRB Index
of 19 commodities dropped 2.3 percent this week, and headed for
the biggest decline since January.
Japanese 10-year bond futures for June delivery gained 0.5
to 139.20 at the Tokyo Stock Exchange after the quake.
Separately, the Asahi newspaper reported Japanese Prime Minister Naoto Kan accepted a donation from a foreign resident in
violation of political contribution laws. Kan said today in
parliament he will return the money if the donation is
confirmed.
Retail Sales
U.S. retail sales increased 1 percent, following a 0.3
percent gain in January, according to the median forecast in a
Bloomberg News survey of economists before the report.
The cost of protecting Asia-Pacific corporate and sovereign
bonds from default increased, according to traders of credit-
default swaps. The Markit iTraxx Australia index rose 1 basis
point to 110 basis points as of 10:35 a.m. in Sydney, according
to Nomura Holdings Inc. It’s on track for its highest close
since Feb. 23, prices from data provider CMA in New York show.
The Markit iTraxx Asia index of 50 investment-grade
borrowers outside Japan climbed 1.5 basis points to 109 basis
points as of 8:40 a.m. in Hong Kong, the highest since March 2,
Royal Bank of Scotland Group Plc and CMA prices show.
“The market was taken by surprise by the range of
unexpected data from each major region,” said James Holt, who
helps manage about $40 billion in Sydney at BlackRock Investment
Management (Australia) Ltd. “We’ll have to see if the surprise
rise in U.S. jobless data numbers is just another hiccup or a
trend. Spain’s downgrade just reminds everyone the trouble that
peripheral Europe is in.”
Consumer Prices
The advance in China’s consumer prices was more than the
4.8 percent median forecast in a Bloomberg News survey of 22
economists. In January, the rise was also 4.9 percent.
Investors are concerned that monetary tightening to tame
inflation may slow the Chinese economy, weakening a global
expansion already hampered by elevated unemployment in the U.S.
and sovereign debt woes in Europe.
Chinese central bank governor Zhou Xiaochuan said at a
briefing in Beijing today that the nation will use interest
rates to control inflation and that the yuan’s exchange rate
isn’t the most important tool for controlling consumer price
gains.
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