Asian Stocks Drop as Spain Euphoria Fades; European Shares Gain
Asian stocks fell, after climbing the most in four months yesterday, and oil dropped to its lowest since October amid doubt Spain’s 100 billion euro ($125 billion) bailout will halt the debt crisis. European equities rose.
The MSCI Asia Pacific Index was 0.8 percent lower as of 8:01 a.m. in London, while the Stoxx Europe 600 Index advanced 0.2 percent. Futures on the Standard & Poor’s 500 Index added 0.6 percent. Crude slumped as much as 2 percent, copper slid 0.9 percent and rubber fell 2.2 percent.
Asian stocks pared gains after the president of the Federal Reserve Bank of Chicago said he supports more stimulus and the yen weakened after the International Monetary Fund said Japan’s currency was overvalued. Italy’s plan to auction at least 9.5 billion euros of debt this week amid surging yields, along with an election on June 17 that may determine Greece’s future in the euro, damped investor optimism following the Spanish bailout.
“It used to be after one of these bailouts you’d get a month’s worth of good reaction, now $100 billion buys you 24 hours,” said Andrew Pease, Sydney-based chief investment strategist at Russell Investment Group, which manages about $150 billion. “The bond market is now demanding more integration and the focus is coming back to growth. Nobody is looking to go back into risk-on positions until they see how Greece plays out.”
The MSCI Asia-Pacific Index has fallen 13 percent from a peak this year on Feb. 29 as Europe’s debt crisis intensified, the US recovery showed signs of losing steam and China’s economy slowed. More than two stocks fell on the regional benchmark for each that gained today.
Federal Reserve Bank of Chicago President Charles Evans said he would support a variety of measures to generate faster US jobs growth.
“I’ve been in favor of pretty much any accommodative policy I’ve heard about,” Evans said in an interview on Bloomberg Television’s “In the Loop” with Betty Liu airing today. “More asset purchases would be useful. More mortgage- backed securities purchases would be good.”
Toyota Motor Corp., Asia’s biggest automaker, declined 1.1 percent in Tokyo. The stock fell as much as 2.3 percent before paring the day’s loss as Japan’s currency weakened. BHP Billiton, the world’s biggest mining company, fell 0.8 percent in Sydney as raw-materials prices slid.
The S&P GSCI gauge of 24 commodities fell 0.6 percent, approaching its lowest level since 2010. The drop was led by declines in prices for nickel, natural gas and crude.
Oil declined for a fourth day after Saudi Arabian Oil Minister Ali al-Naimi said the Organization of Petroleum Exporting Countries may need a higher output quota and the US exempted more countries from sanctions for buying Iranian crude. Oil for July delivery sank as low as $81.07 a barrel before trading 0.7 percent lower on the day at $82.14. The cost of oil has dropped 17 percent this year and yesterday’s close of $82.70 was the lowest since Oct. 6.
The yen reversed earlier gains after the IMF said it was overvalued. Japan’s currency has strengthened about 12 percent against the euro since this year’s low on March 21. Asset purchases by the Bank of Japan, which meets on June 15 to review monetary policy, could be substantially expanded, the Washington-based lender said today. The yen fell 0.5 percent to 99.63 per euro, after strengthening as much as 0.4 percent.