Asian Shares Retreat Amid Earnings as Yen Gains; Oil, Won Drop 

• Aussie pressured as CBA forecasts two more rate cuts this year
• Crude slips from six-month high as copper slides in Shanghai

Asian stocks fell, set for a third weekly loss, as lackluster corporate earnings gave little cause for cheer at a time of worsening economic data. Crude oil retreated from a six-month high and South Korea’s won weakened, while haven assets including the Japanese yen and gold advanced.

All 10 industry groups dropped on the MSCI Asia Pacific Index, with technology shares sliding to a two-month low after Nikkei reported that Taiwan Semiconductor Manufacturing Co.’s shipments of chips for Apple Inc.’s iPhones will shrink. The won led declines among emerging-market currencies as the yen clawed back some its weekly loss. Australia’s dollar slid to a two-month low on speculation the central bank will cut interest rates further this year. Crude fell toward $46 a barrel as copper slumped in Shanghai.

Bullish momentum in equities from a February low faltered this month, as signs of weakness in the global economy heightened concerns over whether central banks have the ability to boost growth. Almost 60 percent of the MSCI Asia Pacific Index members to have reported results for the last quarter announced sales that fell short of analysts’ estimates, according to data compiled by Bloomberg. Bank of Japan Governor Haruhiko Kuroda said Friday that risks to the Japanese economy are tilted to the downside and reiterated that monetary policy will be loosened further if needed.

“After the rally in March and April, things are still looking a little bit uncertain,” said Oliver Lee, investment director at Old Mutual Global Investors (Asia Pacific) Ltd. “There’s not much conviction in the market. The market is still being driven by central bank sentiment and currency movements. The earnings season in Japan hasn’t been great.”

Malaysia’s economic growth moderated in the first quarter and Hong Kong is forecast to also report a slowdown when it releases figures later on Friday. U.S. reports on Friday are projected to show retail sales increased in April for the first time this year and consumer sentiment climbed in May from a seven-month low. South Korea’s central bank left its benchmark interest rate at a record low, a decision anticipated by 15 of 18 economists in a Bloomberg survey.

Chinese figures for new loans and money supply will be released as early as Friday, while reports on industrial production and retail sales are scheduled for Saturday. Industrial output growth is expected to have cooled in April and new loans are estimated to be down more than 40 percent from March, Bloomberg surveys show.

Stocks

The MSCI Asia Pacific Index fell 1 percent as of 1:40 p.m. Tokyo time, set for its lowest close in more than a month. TSMC dropped to its lowest in almost three months in Taipei after Nikkei reported that the company’s shipments of iPhone 6s and iPhone 7 chips in the second half of this year will likely be down at least 20 percent from the same period of 2015. Samsung Electronics Co., the world’s largest maker of phones and memory chips, slipped more than 2 percent.

Japan’s Topix index fell 0.9 percent as the nation’s earnings season peaks on Friday, with more than 400 of the benchmark’s members reporting. The Shanghai Composite Index was headed for a fourth week of declines, the longest string of losses in two years, and the Hang Seng China Enterprises Index was poised to enter a correction. Hong Kong’s Hang Seng Index slid to a two-month low.

Futures on the S&P 500 lost 0.3 percent, after Apple — the world’s most valuable company — sank to the lowest since June 2014 in the last session. In Europe, Bouygues SA, Telecom Italia SpA and Hapag-Lloyd AG are among companies reporting earnings on Friday.

Commodities

West Texas intermediate crude was down 1 percent at $46.22 a barrel, after ending Thursday at a six-month high. Producers in Canada plan to resume operations at some oil-sands sites after wildfires took production offline, while Nigeria said militant attacks have cut output by as much as 600,000 barrels a day. U.S. inventories dropped by 3.4 million barrels last week, government data showed Wednesday.

Copper slumped to the lowest level in more than three months in Shanghai and headed for a third week of losses amid concern demand will cool in China, the top consumer. The nation’s steel futures have plunged 14 percent this week, the biggest ever such loss, after price surges over the last two months prompted authorities to clamp down on speculation in the commodities market.

Gold gained 0.2 percent, trimming this week’s loss to 1.7 percent.

Currencies

The yen strengthened 0.3 percent to 108.74 per dollar, paring its weekly decline to 1.5 percent.

“We’re looking for further BOJ easing in July, but there’s always the risk that they might move in June,” said Shinichiro Kadota, a Tokyo-based foreign-exchange strategist at Barclays Plc. “Those kind of policy expectations would support dollar-yen around the current levels of between 105 and 110.”

The Bloomberg Dollar Spot Index was little changed, poised for a second weekly gain. Regional Federal Reserve chiefs for Boston and Kansas City argued at separate events Thursday that the U.S. central bank risks stoking an asset bubble by delaying raising interest rates for too long. The odds of a hike by year-end climbed to 53 percent from 48 percent on Wednesday, Fed Funds futures show.

The Aussie was down 0.4 percent, headed for a fourth weekly drop. Commonwealth Bank of Australia said policy makers will trim Australia’s key interest rate to 1.25 percent by year-end, from an all-time low of 1.75 percent now.

South Korea’s won declined 0.5 percent. The ringgit fell 0.2 percent after Malaysia reported its economic expansion slowed for a fifth quarter.

Bonds

U.S. Treasuries advanced, pushing the 10-year yield down by two basis points to a one-month low of 1.73 percent.

Source: Bloomberg

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