Asian stocks tumbled, led by shares in Hong Kong and Shanghai, copper headed for its biggest two-day retreat since May and emerging-market currencies fell as weaker-than-estimated Chinese trade and inflation data stoked concern over the outlook for the world’s second-largest economy.
The MSCI Asia Pacific Index dropped 1 percent by 12:28 p.m. in Tokyo, as the Hang Seng Index fell 1.6 percent. Copper slid 1 percent, heading for its lowest close since June and leading industrial metals lower. Standard & Poor’s 500 Indexfutures lost 0.3 percent. China’s yuanweakened as the central bank lowered its fixing by the most since July 2012 versus the dollar. Malaysia’s ringgit snapped a four-day gain and Australia’s currency declined. Gold decreased 0.4 percent.Industrial metals are falling as expanding stockpiles in China, the biggest consumer, add to a raft of data that signify a broad slowdown. The country’s lawmakers are meeting to set economic policy amid growing credit risks that saw the country’s first onshore bond default last week. Better-than-estimated U.S. payrolls figures on March 7 bolstered the case for continued reductions in Federal Reserve stimulus. In Crimea, Russian troops detained Ukrainian border guards amid the ongoing standoff.
All 10 industry groups on the Asia-Pacific equity gauge declined by at least 0.5 percent, as more than four stocks fell for each that advanced. The MSCI All Country World Index retreated a second day after closing at a six-year high on March 6.
The Shanghai Composite Index slid 1.7 percent after capping its first weekly advance since Feb. 14, and is headed to a seven-week low. The Hang Seng China Enterprises Index in Hong Kong retreated 1.4 percent, with insurers and banks the biggest drags.
The S&P/ASX 200 Index in Sydney fell 0.9 percent after closing March 7 at the highest level since June 2008. The Australian dollar dropped 0.3 percent to 90.37 U.S. cents after earlier weakening as much as 0.4 percent. China is the world’s biggest consumer of copper and is Australia’s No. 1 trading partner.
Overseas shipments from China dropped 18.1 percent in February from a year earlier, after analysts polled by Bloomberg predicted a 7.5 percent increase.
Producer prices slid 2 percent, the most since July, while the inflation rate was 2 percent for February, reports at the weekend showed. The National People’s Congress, an annual meeting of China’s lawmakers, continues this week,, with People’s Bank of China Governor Zhou Xiaochuanspeaking tomorrow.
Copper in London extended declines after tumbling 3.8 percent on March 7. Contracts on the metal in Shanghai fell by the 5 percent daily limit, for a third day of decline.
Shanghai Chaori Solar Energy Science & Technology Co., a solar-cell maker, said March 7 it won’t be able to make an interest payment due that day in full, providing the first default in China’s onshore bond market. Chaori’s experience may be a sign the government is backing off from its practice of bailing out companies with bad debt.
Aluminum, nickel and zinc all declined in London. Steel-reinforcement bars in Shanghai headed for the lowest close since September 2012 and rubber futures in Tokyo fell as much as 4.2 percent, the biggest intra-day decline in two weeks.
“Sharp weakness in Chinese metals markets has thrown a spanner into the works of an otherwise risk positive environment,” said Greg Gibbs, head of Asia-Pacific market strategy at Royal Bank of Scotland Group Plc in Singapore, in a note dated today. “Weaker metals prices reflect concern about possible fragility in the Chinese financial system.”
U.S. 10-year Treasuries climbed, snapping a four-day losing streak, with the yield dropping to 2.77 percent today. Economists projected U.S. payrolls would rise by 149,000 last month, with the bigger-than-expected 175,000-worker increase indicating the economy is starting to bounce back from frigid winter weather.
“The fact employment rebounded in February despite the harsh weather pretty much guarantees the Fed will continue with its steady process of tapering by $10 billion at its next meeting,” Kymberly Martin, a markets strategist in Wellington at Bank of New Zealand Ltd., wrote in an e-mail to clients today, referring to the Federal Reserve and its bond-buying program.