Asian stocks dropped, pushing the benchmark gauge down from a four-month high, and currencies from Australia to Malaysia weakened. Copper and crude oil extended declines while precious metals rebounded.
The MSCI Asia Pacific Index lost 0.5 per cent by 10.03am in Tokyo, slipping from the highest close since May 22, as Japan’s Topix Index dropped 0.5 per cent after yesterday’s holiday. Standard & Poor’s 500 Index futures fell 0.1 per cent. The Australian, New Zealand and Malaysian currencies lost at least 0.2 per cent to the dollar. Copper retreated a third day as gold and silver snapped two-day drops. Oil slid a fourth day.
US data from house prices to consumer confidence is due today, almost a week after the Federal Reserve unexpectedly refrained from trimming economic stimulus. The Senate is also considering a measure to cut off funding for President Barack Obama’s health-care law while financing the government through mid-December. Germany’s Ifo business climate index due today probably rose a fifth month in September. Japan issues supermarket sales and Vietnam releases inflation data.
"The increasingly ugly debate on the US fiscal position is certainly a primary concern for markets," Angus Gluskie, chief investment officer at White Funds Management Ltd in Sydney, where he helps oversee about US$500 million, said by phone. "Markets are comforted by the realization that the Fed is not going to rush at it. They are much more likely to go slowly at the tapering."
Australia’s S&P/ASX 200 Index dropped a third day, losing 0.4 per cent after reaching a five-year high September 19. South Korea’s Kospi Index sank 0.6 per cent as biggest stock Samsung Electronics Co declined a third trading day to the lowest level since September 3. The Kospi has advanced 7.2 per cent this quarter.
Futures on the Hang Seng Index in Hong Kong, where morning trading was canceled yesterday because of a typhoon, lost 0.2 per cent in their most recent trading session. Contracts on the Hang Seng China Enterprises Index also fell 0.2 per cent, while the Bloomberg China-US Equity Index of the most-traded Chinese stocks in New York added 0.4 per cent after two days of declines.
The yen gained 0.1 per cent to 98.73 per dollar. Japan’s currency has gained 0.4 per cent versus the greenback this quarter, the second-worst performance of 16 major peers tracked by Bloomberg after South Africa’s rand.
Australia’s dollar lost 0.3 per cent to 94.03 US cents. The currency known as the Aussie is up 2.9 per cent this quarter.
"The equity market’s opened on a softer foot, and we’re seeing a bit of weakness in the Aussie dollar as some risk comes off the table," said Jim Vrondas, the Sydney-based chief currency and payment strategist at OzForex Ltd.
The New Zealand dollar, dubbed the kiwi, lost 0.5 per cent to 83.35 U.S. cents. The currency has surged 7.7 per cent since the end of June, the most among major currencies and its biggest advance since 2011.
Korea’s won weakened 0.2 per cent to 1,075.68 per dollar and the ringgit also retreated 0.2 per cent, to 3.2045 a dollar.
Fed members have been commenting on last week’s decision to maintain their current pace of asset buying. New York Fed President William C. Dudley and the Atlanta Fed’s Dennis Lockhart both said yesterday stimulus is still needed, while Dallas Fed President Richard Fisher said not tapering the US$85 billion a month in bond purchases harmed the central bank’s credibility.
The US House of Representatives voted last week to finance the federal government through mid-December and choke off funding for Obama’s signature health-care law, setting up a showdown with the Senate and the White House.
Government funding expires October 1 and the Treasury is expected to exhaust its ability to borrow funds in mid-October, when it will reach the statutory debt limit. The White House said Obama would veto the House bill and Senate Majority Leader Harry Reid has said Democrats won’t give in to the Republican "ransom" and that the bill is "dead on arrival."
The MSCI Emerging Markets Index lost 0.2 per cent in early trading, after rising 0.3 per cent yesterday. MSCI’s Asia Pacific gauge has gained 7.7 per cent since the end of June. The S&P 500 Index retreated a third day in New York, losing 0.5 per cent.
US reports this week on data from second-quarter gross domestic product to consumer confidence and new home sales may help investors gauge the outlook for stimulus tapering from the Fed.
Figures today may show consumer confidence in the world’s biggest economy stalled this month, falling to 80.0 from 81.5 in August, according to a Bloomberg survey of economists. The Richmond Fed’s manufacturing index is projected to slip to 12 from 14, the median of 11 estimates shows. The Federal Housing Finance Agency’s home price index is expected to show growth, rising to 0.8 per cent from 0.7 per cent in June, according to another survey.
Ten-year Treasury yields were little changed at 2.70 per cent, after falling three basis points, or 0.03 percentage point in New York. Similar-maturity Australian bonds yielded 3.91 per cent, down six basis points after two rising days.
Fed Bank of St Louis President James Bullard said September 20 that the bank retaining stimulus last week was a "borderline decision." Fed Bank of Cleveland President Sandra Pianalto is scheduled to speak today on payments systems in Chicago.
The German Ifo index, which polls executives in Europe’s largest economy, probably rose to 108.0 for this month, after reaching a 16-month high of 107.5 in August, according to the median estimate in a Bloomberg survey of 43 economists before today’s report.
Gold rose 0.3 per cent to US$1,326.23 an ounce, after sinking 0.3 per cent yesterday, while silver jumped 0.6 per cent and palladium climbed 0.3 per cent. Platinum increased for the first time in four days, adding 0.4 per cent.
Copper for three-month delivery on the London Metal Exchange slipped 0.5 per cent, cutting its gain this quarter to 6.9 per cent. Zinc fell 0.6 per cent and rubber futures due in February lost 1.4 per cent.
West Texas Intermediate crude oil slipped 0.3 per cent to US$103.31 a barrel, set for the lowest settlement since July 30. Crude in New York has climbed seven per cent in the third quarter. Natural gas futures lost 0.4 per cent today.
The United Nations Security Council is working toward a resolution over Syria based on the Geneva accord between the US and Russia. The Organization for the Prohibition of Chemical Weapons said September 20 it received an initial disclosure from Syria. Nigeria restored flows from three trunk pipelines that were sabotaged by vandalism and theft.-- Bloomberg