Thursday 28 Mar 2024
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WELLINGTON/TOKYO (Dec 16): Asian stocks fell, with the regional index at a two-month low, as oil’s slump and weaker-than-estimated Chinese manufacturing stoked concern that the global economy may falter. Russia’s ruble jumped after interest rates were raised by the most since 1998, while Indonesia’s rupiah tumbled.

The MSCI Asia Pacific Index slipped 0.7 percent by 11:04 a.m. in Tokyo, falling for a second day. A gauge of Chinese shares in Hong Kong lost 1.1 percent. Standard & Poor’s 500 Index futures added 0.2 percent after the U.S. gauge swung to a drop of 0.6 percent. Oil in New York fell a fifth day, sinking 0.6 percent. The ruble jumped 8.5 percent versus the dollar, according to offshore prices compiled by Bloomberg. Gold rose 0.4 percent after its biggest one-day slide in a year.

Energy companies are driving a retreat in global stocks as increasing crude output coincides with declining demand amid slowing growth outside the U.S. The Federal Reserve starts its two-day monetary policy review today, while a preliminary index of Chinese purchasing managers signaled contraction, according to HSBC Holdings Plc and Markit Economics. The Bank of Russia raised its key rate by 6.5 percentage points, the most since the country’s 1998 default, as the world’s biggest energy exporter courts recession with the ruble at record lows.

“At the end of this year there’s a very much risk-off view and you can see equity markets selling off,” Stephen Halmarick, head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion, said by phone from Sydney. “I think people are waiting to hear the Fed change its language.”

‘Considerable Time’

The U.S. central bank will consider whether to retain a pledge to keep rates near zero for a “considerable time” after they ended their bond-buying program in October. Fed Chair Janet Yellen and her fellow policy makers will examine economic reports in what will be the final two-day Fed meeting this year.

Australia’s S&P/ASX 200 Index dropped 0.3 percent in a sixth straight day of declines, while the Kospi index in Seoul fell 0.4 percent.

Hong Kong’s Hang Seng Index retreated 1 percent and the Hang Seng China Enterprises Index headed for a fourth straight decrease. The Shanghai Composite Index added 0.2 percent.

The so-called flash manufacturing purchasing managers’ index from HSBC Holdings Plc and Markit Economics fell to 49.5, while economists surveyed by Bloomberg projected a reading of 49.8 for December, from 50 last month. It’s the first time since May that the gauge has slipped below 50, the threshold between expansion and contraction. A similar gauge of Japanese factory activity is also due today.

OPEC Outlook

West Texas Intermediate crude fell to $55.68 a barrel in New York, headed for its lowest settlement since May 2009. The U.S. benchmark contract is down 44 percent this year. Brent crude for January settlement lost 0.4 percent to $60.84 a barrel in London, also a five-year low.

United Arab Emirates Energy Minister Suhail Al-Mazrouei said that the Organization of Petroleum Exporting Countries will refrain from cutting crude output even if prices slide to $40 a barrel. The group, which last month refused to reduce production in the face of the oil-market slump, has pumped more than its 30 million barrel-a-day target for the last six months.

The ruble climbed for the first time in seven days, after sliding beyond 60 per dollar for the first time even yesterday. The country’s central bank, which has been trying to stem the currency’s tumble through intervention, boosted the key rate to 17 percent from 10.5 percent, the largest single increase since 1998, when Russian rates soared past 100 percent and the government defaulted on its debt.

Throwing Darts

One-month non-deliverable forwards on the currency gained 0.9 percent to 66.0599 per dollar after sinking 11 percent yesterday. The Market Vectors Russia exchange-traded fund rose about 3.5 percent in after-hours trading in New York.

“They are throwing darts in the dark,” Slava Rabinovich, chief executive officer at Diamond Age Capital Advisers in Moscow, which manages $240 million in Russian assets, said by phone. “They are panicking. The ruble will spike back up, but the spike is going to be very short-lived. The ruble has only one way to go because of the geopolitical crisis and falling oil prices.”

The yen was little changed at 117.71 per dollar after surging 0.8 percent yesterday, while Australia’s dollar added 0.2 percent to 82.26 U.S. cents after the central bank reiterated that it expects a period of stability in interest rates, which are at a record low.

Yields on 10-year U.S. Treasuries fell one basis point, or 0.01 percentage point, to 2.11 percent, dropping for the sixth time in seven sessions.

Gold rose to $1,197.29 an ounce on the spot market after sliding 2.4 percent yesterday and touching a one-week low.

 

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