Asian Stocks Fall With Won on Global Growth Woes; Oil Below $44 

• Dollar gains after Fed officials say June rate hike possible
• Industrial metals retreat as sovereign bonds advance

Asian stocks fell for a sixth day, their longest losing streak since February, as anxiety over the health of the global economy unnerved investors. South Korea’s won dropped by the most in four months, crude oil traded below $44 a barrel and sovereign bonds rallied.

Australia’s benchmark was set for its biggest loss in a month as BHP Billiton Ltd. plunged by the most since 2008. Indonesia’s sank to a two-month low after data showed its gross domestic product grew less than economists forecast. U.S. crude was little changed, after tumbling by about 5 percent in the last two days. A gauge of dollar strength rose, extending Tuesday’s bounce from the weakest level in almost a year, after Federal Reserve officials flagged the possibility of an interest-rate hike in June. Australian government debt advanced following gains in U.S. Treasuries.

Global stocks’ rebound from a three-year low in February suffered a setback over the past two weeks as economic reports and corporate earnings underwhelmed investors. Citigroup Inc.’s Economic Surprise Index for the U.S. has fallen to its weakest level since February and analysts are predicting an 8 percent decline in quarterly profits for S&P 500 companies. U.K. manufacturing unexpectedly shrank for the first time in three years in April, while China’s weakened, reports indicated on Tuesday.

“In a now familiar theme, traders are becoming concerned about the possibility that the next volatile market swing, in this case downward, may not be too far away,” said Ric Spooner, chief market analyst in Sydney at CMC Markets. “Both U.S. stock market valuations and commodity prices have risen to levels that could be difficult to sustain against the ongoing reality of sluggish global demand growth.”

Gauges of last month’s services output are due Tuesday for the U.S., the euro area, the U.K. and India. The U.S. also has reports on employment and durable goods orders, while Tesla Motors Inc. and Time Warner Inc. are among American companies that will release earnings. In Europe, Siemens AG and Societe Generale SA reported profits that beat analysts’ estimates, while Anheuser-Busch InBev NV fell short.

Stocks

The MSCI Asia Pacific excluding Japan Index dropped 1.3 percent as of 1:10 p.m. Hong Kong time, its biggest loss in a month. Benchmarks in Hong Kong, Singapore, Sydney and Taipei fell by more than 1 percent.

In Australia, BHP Billiton tumbled as much as 10 percent — its biggest intraday loss since 2008 — after it was named in a $44 billion law suit over a dam rupture in Brazil that caused deaths and severe environmental damage. Woolworths Ltd., the nation’s largest supermarket chain, sank as much as 7 percent after S&P Global Ratings downgraded the company’s credit rating.

The Jakarta Composite Index fell 0.9 percent. Indonesia, Southeast Asia’s largest economy, reported GDP growth of 4.9 percent for the first quarter, less than the 5.1 percent forecast by economists in a Bloomberg survey.

Futures on the S&P 500 declined 0.2 percent, as did contracts on the U.K.’s FTSE 100 Index.

“The continued narrative is that the global economy is not very strong, even if the U.S. is the best of the bunch,” said Joe Bell, a Cincinnati-based senior equity analyst at Schaeffer’s Investment Research Inc. “We’ve had such a strong run-up over the last few months that we’re in a bit of a consolidation phase.”

Currencies

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, rose 0.2 percent after gaining 0.7 percent in the last session. Atlanta Fed President Dennis Lockhart said Tuesday that the Federal Open Market Committee could move on rates in June if warranted, though he is not leaning in either direction at this point. San Francisco Fed President John Williams says that he would support a rate hike next month provided the U.S. economy stayed on track.

The Japanese yen fell 0.6 percent to 107.21 per dollar. Finance Minister Taro Aso said Tuesday, when the currency reached an 18-month high of 105.55, that the government is monitoring speculative foreign-exchange trades and will respond if needed. The yen has strengthened more than twice as much as any other major currency in the past week as the Bank of Japan unexpectedly refrained from adding to stimulus at a policy review.

The won weakened 1.3 percent before the Bank of Korea releases the minutes of its last policy meeting. Malaysia’s ringgit slumped as much as 1.5 percent to its weakest level since March, weighed down by the drop in crude prices. Malaysia is Asia’s only major net oil exporter.

“The market is grasping the view that the dollar probably fell a little too much, and a rebound could be ahead, and this seems to have deteriorated sentiment towards emerging-market assets including the won,” said Jeon Seung Ji, a currency analyst in Seoul at Samsung Futures Inc.

Commodities

Crude oil was little changed at $43.71 a barrel. U.S. inventories increased by 1.3 million barrels last week, the American Petroleum Institute was said to report Tuesday. Government data Wednesday is forecast to show supplies rose by 750,000 barrels.

Gold fell as much as 0.6 percent to $1,278.99 an ounce, reflecting the dollar’s rebound. The metal reached $1,303.82 on Monday, the highest intraday level since January 2015.

Nickel, zinc and lead all dropped more than 0.8 percent in London, while copper fell 0.4 percent.

Bonds

The yield on Australia’s 10-year government bonds fell five basis points to a three-week low of 2.42 percent, after the rate on similar-maturity U.S. Treasuries slid eight basis points on Tuesday to 1.80 percent.

The cost of insuring corporate and sovereign bonds in the Asia-Pacific region rose to about the highest level in three weeks, according to Societe Generale SA prices for the Markit iTraxx Asia index of credit-default swaps.

Source: Bloomberg

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